UK consumer confidence hits record low as household mood darkens


UK consumer confidence has fallen to its lowest stage since comparable information started virtually 50 years in the past as the rising value of residing stokes issues over private funds and financial prospects.

In month-to-month research from knowledge supplier GfK, the August index rating for total consumer confidence fell to minus 44 from a determine of minus 41 the earlier month.

That was the bottom studying since equal knowledge have been first produced in 1974.

The confidence figures have been revealed on Friday shortly earlier than retail gross sales figures launched by the Office for National Statistics confirmed spending edged greater in July. The figures have been boosted by on-line promotions however the total pattern was for individuals to buy much less.

The quantity of products bought rose 0.3 per cent within the month, bucking expectations that it could prolong the decline in May and June however, over the latest three-month interval, gross sales have been down 1.2 per cent on the earlier three months.

Online gross sales rose 4.8 per cent in July, which the ONS attributed to promotions led by Amazon’s Prime Day in the midst of final month.

Stripping this out of the figures, retail gross sales volumes have been down 3.4 per cent in July on an annual foundation. The worth of gross sales was up 7.8 per cent over the identical interval, highlighting the rise in costs on the excessive avenue.

The decline in consumer confidence displays a darkening mood throughout the UK financial system, with costs rising at double-digit charges, the biggest drop in actual wages for greater than 20 years, a resurgence of strikes and mounting pressures throughout public providers.

GfK’s survey was undertaken between August 1 and 12, a interval through which the Bank of England forecast the financial system would quickly slide right into a recession lasting greater than a 12 months as households struggled to pay vitality payments, which is able to most likely rise greater than 75 per cent in October.

All 5 components that comprise the general consumer confidence index fell, prompting Joe Staton, a director at GfK, to say: “A sense of exasperation about the UK’s economy is the biggest driver of these findings.”

“[They] point to a sense of capitulation, of financial events moving far beyond the control of ordinary people,” he added.

Linda Ellett, UK head of consumer markets, retail and leisure at KPMG, mentioned the decline in confidence would most likely weaken retail gross sales and result in “changing buying behaviour, both of which will impact the high street and wider economy”.

When individuals have been requested about their private monetary scenario for the GfK survey, their scores over the previous 12 months equalled the low factors of the monetary disaster in 2008-09 and the austerity interval of 2012.

But expectations for his or her scenario over the approaching 12 months will trigger extra concern. That determine has fallen to minus 31, considerably worse than in both of these earlier intervals.

The detrimental rating displays many extra individuals saying their private funds will deteriorate slightly than enhance over the 12 months forward.

“With headline after headline revealing record inflation eroding household buying power, the strain on the personal finances of many in the UK is alarming,” mentioned GfK’s Staton.

“Just making ends meet has become a nightmare and the crisis of confidence will only worsen with the darkening days of autumn and the colder months of winter.”

Households have been equally gloomy about basic financial prospects, with the rating declining each month since December final 12 months. In August, it stood at minus 68, worse than on the peak of the primary coronavirus wave when the UK was in a strict lockdown, though higher than in the course of the world monetary disaster.

Households’ evaluation of the UK’s financial prospects within the 12 months forward was minus 60, extra gloomy than at any time since GfK began amassing the information, and 54 factors decrease than in August 2021.

With such low confidence of their funds and the financial scenario, households have been naturally unlikely to say that now was an excellent time to make a giant buy. This sub-index fell to minus 38, down 4 factors on the month and from a stage of minus 3 a 12 months earlier.

In distinction, with rates of interest rising, individuals more and more assume now is an effective time to save lots of. If many individuals improve financial savings on the identical time and scale back spending, it can speed up the anticipated financial downturn this autumn.

Source link


Please enter your comment!
Please enter your name here