UK GFK Consumer Confidence Survey (OCT) (10:30 GMT, 05:30 EST)
http://biz.yahoo.com/fxcm/051028/1130540462.html?.v=1
Previous: -5
Outlook: -5
Outlook: Economists expect the read on consumer confidence to remain unchanged at a year low of –5 for October as the state of the British economy remains dim. Although numbers for September as far as spending and sales have been slightly better than expected, they were not stellar and sentiment amongst British consumers is still that of disconcertment. Despite the fall of oil prices during the month to well below the record prices seen at the beginning of September, gas prices have remained well above what consumers are used to and inflation is at its highest in 8 years, causing consumers to reconsider their spending habits and question the state of the economy. This again puts the Bank of England in a very tight spot. In order to curb inflation and ease the price burden on consumers, the bank has to stay or raise rates. However, doing this will even further hurt the already slow economic growth of the country. Dropping interest rates again to attempt to jump-start the economy however could catalyze inflation.
Previous: British consumer confidence fell for the second month in a row in September to its lowest level in 11 months. The index fell from –4 to –5 from August to September, as economists predicted that the index would remain unchanged. This drop signaled that consumer spending would continue to fall, being squeezed by high oil prices. It also indicated that the decrease in the interest rate that the Bank of England decided on a month earlier to help boost the economy was not having the desired effects. Rising oil prices and inflation are keeping consumers wary of spending and unconfident in the strength of their buying power. Due to a continuous lull in domestic demand, growth in the British economy is expected to expand 2 percent in 2005, cut from 2.5 percent during the month, the slowest since 2002. Consistently low consumer outlooks are signaling that this slow growth will be hard to correct.
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