Sterling’s crash in value since Britain voted to leave the European Union is finally starting to worry regular British citizens, according to the GfK consumer confidence index.
Market research firm GfK’s consumer confidence reading, based on a survey of 2000 Brits, was -3 for October, down significantly from -1 in September.
In the immediate aftermath of the vote, consumer confidence hit a low of -12, but Joe Staton, GfK’s head of market dynamics, suggest that Brits are preparing for a more bumpy ride.
“Declining optimism about economic prospects for the wider UK economy has depressed the consumer mood this month. Despite the continuing feel-good factor arising from persistent low interest and inflation rates, sterling’s sharp decline is arguably stoking fears that price rises will hit UK living standards hard next year,” Staton said in a statement on Friday morning.
Here’s GfK’s chart:
Sterling has crashed more than 17% since the vote to leave the EU, falling sharply in the first few weeks after the vote, before briefly recovering, and then crashing again over the course of September and October. It now stands at just $1.21, and that is affecting the purchasing power of British citizens.
For instance, on Thursday Apple increased the cost of its products in the UK significantly to reflect the change in the exchange rate. The cheapest Macbook Air now retails at £849, having previously cost £749.
Inflation has surged higher as a consequence of the pound’s dramatic fall in recent weeks, hitting 1% earlier in October, the first time in around two years it reached that level. Inflation is set to soar further as a result of the crash, with expectations that 3% or 3.5% inflation could be seen in 2017.
Since the referendum broad UK economic data has shown the country holding up better than expected. According to the ONS’ data, GDP grew by 0.5% in the quarter, above the consensus forecast of economists who saw growth increasing just 0.3%.
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