5 December 2007
Latest statistics suggest that shoppers are likely to tighten their purse strings in the coming months with consumer optimism at its lowest level for three years.
According to Nationwide's Consumer Confidence Index, consumer confidence has fallen by 12 points to 86 last month, representing the biggest slump since the survey was started in 2004.
Analysts believe that the figures show the need for an interest rate cut, as the Bank of England's Monetary Policy Committee (MPC) meet on Thursday.
Indeed, some analysts have predicted MPC members will vote to lower borrowing costs by 0.25% to firm up the economy.
Explaining some of the reasons for the drop in consumer confidence, Nationwide's chief economist Fionnuala Earley said: "Uncertainty about the effects of the credit crunch together with rising oil and food prices seem to be affecting feelings about jobs and the future economic situation.
"With this in mind, it is natural that consumers would think about tightening their belts this Christmas and this is reflected in the weaker spending index," she added.
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