British consumer confidence tumbled to its lowest in almost two years in January, hit by rising inflation, an increase in value-added tax and a looming programme of public spending cuts, a survey showed last Friday. The GfK NOP consumer confidence barometer slid 8 points, the sharpest monthly slump since the recession of 1992, to a 22-month low of -29. Declines were registered in all five categories, with the "climate for major purchases" index the hardest hit following the rise in VAT to 20% from 17.5% at the start of the month. Interviews for the survey were conducted in the second week of January, before data showed Britain's economy suffered a shock 0.5% contraction in the final three months of 2010, with unusually poor winter weather accounting for only part of its first shrinkage in five quarters. Construction and service sector output, dominant parts of the economy, posted big quarterly falls and the Office for National Statistics said even without the disruption from the coldest December in a century, the economy would have struggled to register any growth at all. With inflation at 3.7% almost double the Bank of England's target, shock figures raise the ugly spectre of stagflation and leave the central bank with an acute policy dilemma