April 20 (Reuters) - British consumer morale last month hit its lowest level since mid-2023, according to two surveys on Monday, reflecting the impact of the conflict in the Middle East.
Inflation in Britain - already the highest among the Group of Seven advanced economies - looks set to rise further, and investors consider the country is especially exposed to the energy price surge that followed U.S.-Israeli attacks on Iran that began at the end of February.
Data company S&P Global said its consumer
sentiment index fell to 42.3 from 44.1, a 33-month low, while accountants Deloitte said its quarterly gauge of confidence sank to its lowest since the third quarter of 2023.
Both reported a deterioration of morale around household finances and job security.
IRAN VOWS RETALIATION AFTER SHIP SEIZED
Concerns grew on Monday that the ceasefire between the United States and Iran might collapse after the U.S. said it had seized an Iranian cargo ship that tried to run its blockade and Iran said it would retaliate.
"Many (consumers) were already facing a squeeze on their household budgets at the start of the year with the slowing of wage growth and a cooling jobs market," said Céline Fenech, consumer insight lead at Deloitte UK.
"For consumer sentiment and spending to improve, households will want to see a more certain outlook for the economy."
The housing market has also shown signs of weakening.
Separate data from online property portal Rightmove showed asking prices for British homes rose by 0.8% month-on-month in April, a smaller-than-usual increase when activity often increases.
"With mortgage rates remaining elevated due to the war in Iran, it's not a surprise that price growth is proving strongest in parts of the market less exposed to higher borrowing costs, such as top-of-the-ladder homes, while sectors more exposed to interest rates are seeing slower momentum," said Colleen Babcock, property expert at Rightmove.
S&P Global said more than half of households expect the Bank of England will raise interest rates. BoE Governor Andrew Bailey had said earlier this month that investors were getting ahead of themselves by pricing in interest rate hikes.
(Reporting by Andy Bruce; editing by Barbara Lewis)
