British consumer morale fell last month to its lowest level since May 2009 as households took a bleaker view of the outlook following June's austere budget, building society Nationwide said today.
Rising food and fuel costs may also have played a part in the drop in Nationwide's consumer confidence indicator to 56 in July from 63 in June, which was driven by a sharp fall in households' sentiment about the economy, job market and income over the next six months.
July's survey of 1,000 people was carried out from June 21st to July 18th, making it the first since Chancellor George Osborne's June 22nd emergency budget.
Mr Osborne announced 25 per cent spending cuts for most government departments as well as a rise in value-added tax on January 1st next year.
"There appears to be a growing concern among consumers as to their level of disposable income in the months ahead," said Nationwide chief economist Martin Gahbauer.
"July will have been a time for many consumers to reassess their individual circumstances following the chancellor's emergency budget, and inflationary pressures, such as rising food and fuel costs, may now be leading to more negative sentiment," he added.
The Nationwide series hit a two-year high of 84 in February and has fallen steadily since, adding to the weight of data suggesting that GDP growth is likely to slow sharply from the 1.1 per cent recorded in the April-June quarter.
The Bank of England will publish a quarterly update to its growth and inflation forecasts at 10:30 am, and economists expect it to downgrade its 2011 growth forecasts and raise its inflation prediction.
Reuters