LONDON (AP) -- Consumer confidence in Britain has slumped to the lowest level in five years, with one in five people saying they have no spare cash to spend, the British Retail Consortium said Monday. A new government report said producer price inflation is now nearly 9 percent.
Britain has experienced a double whammy of rising inflation and a slowing economy, with prices of fuel and food straining household finances while fear of inflation has constrained the Bank of England from giving any relief in the form of lower interest rates. Consumer prices were up 3 percent in April, a full point above the government's target.
The report by Nielsen and the consortium found that 60 percent of respondents thought job prospects were either not so good or bad, up from 50 percent a year ago. Fifty-seven percent expected their personal finances to be not so good or bad over the coming 12 months, up from 46 percent six months ago.
Three-fourths said this is not a good time to spend on things they want or need, and one in five said they have no spare cash for discretionary spending.
The Office for National Statistics reported Monday that output prices for manufactured products rose 1.6 percent in May compared to April, taking the annual rate to 8.9 percent. Input prices were up 27.9 percent in the year to May, compared to 24.3 percent in April, the report said.
One analyst said businesses may have trouble passing all of those increased costs on to consumers. ''Much of the rise in factory gate inflation is likely to be absorbed in retailers' profit margins,'' said Jonathan Loynes, chief European economist at Capital Economics.
''But the increases are now so large that at least some portion of them looks likely to work its way into the high street, even if retail sales slump.''
Nielsen and BRC said the consumer confidence score of 79 was the lowest since their polling series began in 2003.
''With one in five people saying they have no spare cash, the highest ever recorded by this survey, customers are telling us they are cutting back on spending on all sorts of nonessentials,'' said Stephen Robertson, director general of the consortium. ''Clothes, footwear, furniture and new technology are the biggest casualties as consumers attempt to manage their money.''
The survey was based on responses from a thousand people in the UK, extracted from Nielsen's Global Online Consumer Survey conducted in April 2008 among 28,253 internet users in 51 markets from Europe, Asia, North America and the Middle East.
''The survey makes pretty worrying reading across the board and fuels concern that we are in for an extended period of marked consumer retrenchment,'' said Howard Archer, chief European economist at Global Insight.
''Consumer sentiment is being buffeted by a number of factors including the markedly weakening economy, a sharply deteriorating housing market, the squeeze on purchasing power coming from elevated utility, food and petrol prices, tight credit conditions and a lack of confidence in the government,'' Archer added.
