'Burnham bounce' fades as economic concerns mount

(Sharecast News) - Consumer sentiment softened in September, a survey showed on Monday, as higher energy prices and growing concerns about a possible interest rate hike weighed heavily. The latest S&P Global consumer sentiment index came in at 42.7, down on August's 42.9 and a three-month low.

Within that, expectations for finances over the coming year fell to 43.4 from 44.6, with respondents flagged difficulties accessing credit, while the degree of job insecurity was the strongest in 43 months, at 45.5. The overall labour market sentiment index eased to 48.7, a 42-month low.

The survey also found that more than half of British households - 53% - now expect Bank Rate to rise.

Maryam Baluch, economist at S&P Global Market Intelligence, said: "September data shows a downbeat mood spreading across UK households, as improved sentiment surrounding the new government is eroded by renewed worries over energy prices, the cost of living and job prospects.

"At the same time, expectations that interest rates will begin to rise in the coming months have become more entrenched."

Andy Burnham becoming prime minister this summer led to an initial uplift in consumer sentiment. However, America's ongoing war with Iran continues to disrupt global energy prices and push up inflation, which hit 3.1% in August. The Bank of England opted to leave the cost of borrowing on hold last week at 3.75%, for the sixth time so far this year. But it warned rates would likely rise if energy prices remained elevated. Both the US Federal Reserve and European Central Bank have already increased Bank Rate in response to the conflict in the Middle East.

A panel of 1,500 households was surveyed for the CSI between 3 and 7 September.