Rising prices weigh heavily on consumer sentiment - BRC

(Sharecast News) - Consumer sentiment softened in July, a survey suggested on Thursday, as rising prices undermined confidence.

According to data from the British Retail Consortium's latest consumer sentiment monitor, expectations for state of the economy over the next three months eased to -33 from -28 in June.

The personal financial situation also worsened, down two points to -7, while saving edged up -3 from -4.

Expectations for spending overall, meanwhile, rose to 16 from 12, and on retail specifically to 3 from 2.

The UK economy is battling sluggish growth alongside an uptick in inflation.

The consumer price index now stands at 3.6%, ahead of the Bank of England's long-term target of 2%. Food price inflation is rising even more sharply, however, reaching 5.2% in the four weeks to 13 July, according to recent data from Worldpanel by Numerator.

As a result, interest rates remain elevated. The BoE has cut the cost of borrowing only twice this year, to 4.25%, although another reduction is widely expected next month.

Helen Dickinson, chief executive at the BRC, said: "It is little surprise that consumer confidence fell in July.

"Rising inflation, particularly for food, has put more pressure on personal finances, increasing the cost of living. This has caused spending expectations to rise, particularly for groceries, as households anticipate higher prices at the till."

Among individual categories, consumers expected spending to rise most notably in food and groceries, up from 20 in June to 25.

The survey of 2,000 UK adults was carried out between 8 and 11 July by Opinium on behalf of the BRC.