LONDON (Reuters) - British consumer confidence softened last month in the face of higher inflation, a survey showed on Monday, adding to the weight of evidence showing that higher inflation is taking the steam out of the main engine of the economy.
Deloitte said its quarterly consumer confidence index dropped to -7 for the first quarter of 2017 from -6 in the last three months of 2016.
“Since last summer’s EU referendum consumer spending has held up well, but with inflation rising and nominal wage growth starting to slow, consumers are beginning to feel a squeeze on their disposable income,” Deloitte economist Ian Stewart said.
Official retail sales data on Friday showed the sharpest fall in the volume of goods sold since 2010 during the first quarter of 2017, with statisticians citing a broad-based rise in prices.
Higher prices partly reflect the fall in sterling after June 2016’s Brexit vote, and on Friday Bank of England policymaker Michael Saunders said he would not be surprised to see inflation hit 3 percent later this year or in early 2018.
However Prime Minister Theresa May is banking on voters still enjoying the fruits of unexpectedly strong growth since the 2016 referendum when they come to vote in an early election she has called for June 8 to boost her parliamentary majority.
Separately, property website Rightmove said the average price advertised for houses and apartments sold on it in April had risen to a record-high 313,655 pounds ($400,945), up 1.1 percent from March.
But Rightmove - which does not seasonally adjust its data - said that in previous years prices rose 1.6 percent price on average in April.
“Increasingly stretched buyer affordability will continue to be a price moderator for sellers who are over-ambitious with their pricing, tempering the pace of price rises,” Rightmove director Miles Shipside said.
The BoE has previously pointed to a close link between British consumer sentiment and rises and falls in house prices.
Reporting by David Milliken
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