LONDON: UK consumers are anticipating price hikes in every major category of goods, as confidence dips among Leave voters following the triggering of the process for the UK to leave the EU, a new study reveals.
Research firm Nielsen's "Article 50" Survey polled 500 UK consumers as an adjunct to its Global Survey of Consumer Confidence, and found that UK consumer confidence remains roughly stable at 102. A score over 100 shows optimism; less shows pessimism.
However, a significant change was evident among respondents who indicated that they had voted Leave. In January, Leaver confidence stood at 109. By early April, that number had dropped to 106. In the same period, confidence among Remain voters increased by one point to 97.
The report also showed a steady decline in support for Brexit among Leavers. In December support stood at 74%, but by April this year, the level had dropped by 11 percentage points to 63%.
"Although immigration concerns have dropped, Leavers are starting to worry more about everyday matters, particularly rising utility bills and food prices," said Steve Smith, managing director, Nielsen UK and Ireland.
While consumer confidence generally remains stable, he observed a "wobble" among Leave voters.
"Inflation is creeping in and as it could be as high as 3% by July, consumers believe this will translate to price rises across the board," Smith added.
Following a ten-year high in the second half of 2016, fewer than half of all respondents felt that now was a good time to buy items they want or need. At the same time, just over half of consumers are cutting their spending, an 18 month high of 51%.
Meanwhile, the latest Labour Market study from the Office for National Statistics, for the three months to the end of February, showed the slowest rate of growth in real wages since 2014, even as employment rates in the UK continue to increase.
"Higher inflation, coupled with subdued earnings increases, means that the real growth rate in pay has tailed off to just above zero," David Freeman, ONS senior statistician, told the FT.
Both consumers and economists are anticipating a squeeze on living standards as the depreciation of the pound causes retailers to pass on increased import costs.
According to Smith, however, "brands and retailers are working closely together on solutions to minimise any price impact on shoppers".
Data sourced from Nielsen, ONS, Financial Times; additional content by WARC staff