Market analysis: Perceptions of rising cost of living put on consumer brakes

The late months of 2017 were gloomy for UK consumer sentiment with major news coming in November as the Bank of England (BoE) announced that the inflation rate hit a five-year high of 3.1%, leaving consumers feeling the pinch of higher prices and bracing for further increases.

While the inflation rate has risen wage growth has been stagnant, falling behind the growth of inflation and squeezing household spending. Delving into GfK’s Consumer Confidence Barometer, which measures consumers’ perception of the cost of living now compared to 12 months ago results highlight that in December 2017 54% of people thought the cost of living was a lot higher compared to the previous year’s 34%. This perception has continued to increase since August 2016 after the EU referendum but has increased significantly over the last two months of 2017.