Source: Sharecast
According to the latest consumer sentiment monitor from the British Retail Consortium, expectations for the state of the economy over the next three months fell to -40 in October, from -34 a month previously. The personal financial situation index was also lower, falling three points to -18.
Looking ahead to retail’s so-called golden quarter - which includes shopping periods such as Black Friday and Christmas - and spending intentions rose, to 15 from 5 on retail, and to 23 from 15 on overall spending. Saving intentions shed two points to -7.
The outbreak of war in the Middle East has thrown global energy prices into turmoil and reignited inflationary pressures. On Wednesday, official data showed the consumer price index had risen to an above-forecast 3.5% in September, well above the Bank of England’s 2% target, as petrol and diesel prices rocketed.
The Monetary Policy Committee has so far left Bank Rate on hold this year at 3.75%, but warned in the summer it would increase should inflation continue to climb. Most economists have pencilled in a rate rise for when the MPC next meets on 5 November.
Chancellor John Healey, meanwhile, will present his first Budget next week. He will need to juggle rising costs and sluggish economic growth with soaring government spending and borrowing.
Helen Dickinson, chief executive of the BRC, said: "Sentiment about personal finances fell to the second-lowest level on record. With the festive period now falling within the three-month window, there were significant rises in spending expectations, though concerns around inflation may also be contributing to this.
"Households everywhere will be looking to the chancellor to tackle the cost of living challenge in the Budget. Retailers have been doing everything they can to limit price rises, but with the industry now paying 20% more in taxes than two years ago, there is no more room for manoeuvre."
A panel of 2,000 adults were surveyed by Opinium for the BRC between 6 and 9 October.