Nationwide said the hit to consumer confidence was not unexpected given the continuing news of economic difficulties, petrol prices breaching the £1 per litre barrier and higher staple food prices.
Consumer’s house price growth expectations also continued their downward trend, with consumers anticipating a growth of just 1.2 per cent over the next six months, down from 1.9 per cent in October. This was consistent with Nationwide’s forecast that house price inflation would be around zero per cent in 2008.
Nationwide revealed all four of its confidence indices recorded falls in November. The smallest fall, of eight points, was in the Present Situation Index, which reflected feelings about the current economic and employment situation.
Fionnuala Earley, Nationwide’s chief economist, commented: “Uncertainty about the effects of the credit crunch, together with rising oil and food prices, seem to be affecting feelings about jobs and the future economic situation. With this in mind, it is natural that consumers would think about tightening their belts this Christmas and this is reflected in the weaker spending index.”
Jo Roberts, director at Needanadviser.com, said: “The December Base Rate cut will be massively good for consumer confidence. There’s been such a lot of negative press and consumer confidence is very low. Hopefully, we’ll get another cut after Christmas and this will help loosen the market and stimulate some of the housing market.”
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