Consumer Confidence in the UK Drops Amid Concerns over Finances and Economy
British consumer confidence has plummeted this month, following a surge to its highest level since the beginning of 2022 in September. The drop reflects households’ renewed worries about their personal finances and the wider economy, according to the GfK consumer confidence index. The index, which is the longest-running survey of its kind in Britain, fell to -30 in October from -21 in September.
Economists who were polled by Reuters had predicted a modest improvement to -20, making the actual nine-point drop the largest since a one-off survey conducted by GfK at the start of the COVID-19 pandemic in 2020. The last time the survey revealed a bigger drop in a regular monthly release was back in December 1994.
Joe Staton, the client strategy director at GfK, commented on the significant decline, stating, “This sharp fall underlines that the cost-of-living crisis, and simply not having enough money to make ends meet, are still exerting acute pressure for many consumers.”
In September, British consumer price inflation remained at 6.7%, which is the highest rate among major advanced economies. However, it has decreased from the 41-year high of 11.1% recorded in October 2022. While most economists anticipate a sharp fall in inflation this month due to less unfavorable year-on-year comparisons for energy prices, the average cost of living is still approximately 17% higher than it was two years ago.
Joe Staton noted the challenges faced by households, including “meeting the accelerating costs of heating our homes, filling our petrol tanks, coping with surging mortgage and rental rates, a slowing jobs market, and now the uncertainties posed by conflict in the Middle East” which all contribute to the growing unease.
Additionally, the willingness of households to make major purchases experienced a significant monthly decline, causing concern for retailers leading up to the Christmas season. However, the index level remains higher than it was in October 2022.
The GfK survey involved polling 2,000 individuals aged 16 and over between October 2 and October 13.
This decrease in consumer confidence highlights the ongoing challenges faced by UK households. Rising inflation, increased living costs, and uncertainties in the global landscape have all contributed to a sense of unease among consumers. As the Christmas season approaches, retailers will be closely watching the impact on consumer spending.
More detail via Reuters here… ( Image via Reuters )