Consumer confidence falls again
Updated on 09 January 2008
Consumer confidence fell for the third month in a row during December despite a reduction in interest rates, figures showed.
Nationwide Building Society said its consumer confidence index fell by one point during the month to 85 - its lowest level since February last year.
The drop came despite the Bank of England knocking 0.25% off the cost of borrowing, reducing interest rates to 5.5%, providing some relief for hard pressed homeowners.
But ongoing economic uncertainty and the impact of higher food and petrol prices continued to take their toll on people's confidence. Consumers felt particularly pessimistic about the current economic and employment situation, with this index dropping by three points to 88 on the back of concerns about the economy.
People's sentiment about the economy and employment in six months' time remained unchanged, but this apparent stability masked concerns about the economic outlook.
Around 42% of people think the UK's economic situation will be worse in six months time than it is now. But despite this people remain confident about the jobs market, with the number of people who feel positive about the future employment situation jumping by nearly 10% year-on-year to 44%.
Nearly nine out of 10 people also think their household income will be either the same or higher in six months time.
At the same time people's willingness to spend money picked up by five points during December, but at 68 the index still remains well below the average for the year of 82. Within this consumers are still reluctant to splash out on a major purchase, with 58% thinking now is a bad time to buy something such as a house or car, 10% more than in December last year.
Fionnuala Earley, Nationwide's chief economist, said: "Another weak month for consumer confidence is not surprising given current economic conditions. Continued uncertainty about the future path of the economy along with a weakening housing market was bound to affect consumer sentiment.
"Further rate cuts expected in the first quarter of 2008 may help to improve matters, but it is likely to be a few months before consumer confidence recovers to levels seen earlier this year."
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