London, United Kingdom. British consumer morale fell last month to its lowest level since mid-2023, according to two surveys released this week, amid concerns linked to conflict in the Middle East. The surveys pointed to weakening sentiment around household finances and job security.
Surveys show declining sentiment
Data company S&P Global said its consumer sentiment index fell to 42.3 from 44.1, a 33-month low. Accountants Deloitte said its quarterly gauge of confidence dropped to its lowest since the third quarter of 2023.
Both surveys reported a deterioration in morale regarding household finances and job security.
Inflation and energy price exposure
Inflation in Britain, already the highest among the Group of Seven advanced economies, is expected to rise further. Investors consider the country especially exposed to the energy price surge that followed US-Israeli attacks on Iran that began at the end of February.
Concerns grew on Monday that the ceasefire between the United States and Iran might collapse after the US said it had seized an Iranian cargo ship that tried to run its blockade, and Iran said it would retaliate.
“Many (consumers) were already facing a squeeze on their household budgets at the start of the year with the slowing of wage growth and a cooling jobs market,” said Céline Fenech, consumer insight lead at Deloitte UK. “For consumer sentiment and spending to improve, households will want to see a more certain outlook for the economy.”
Housing market shows signs of weakening
The housing market has also shown signs of weakening, with separate data from online property portal Rightmove showing asking prices for British homes rose 0.8% month-on-month in April, a smaller-than-usual increase for a period when activity often increases.
“With mortgage rates remaining elevated due to the war in Iran, it’s not a surprise that price growth is proving strongest in parts of the market less exposed to higher borrowing costs, such as top-of-the-ladder homes, while sectors more exposed to interest rates are seeing slower momentum,” said Colleen Babcock, property expert at Rightmove.
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