UK consumer confidence hovered around a 50-year low last month as Britons struggled against a backdrop of rising inflation, political unrest and high borrowing costs, according to new data.
The Consumer Confidence Index, a closely monitored measure of how people view their personal finances and broader economic outlook, rose just two points to minus 47 in October, from minus 49 a month earlier.
The October reading was only marginally better than the September reading, the lowest since measurements began in 1974.
Joe Staton, director of customer strategy at GfK, said households were concerned not only about the prospect of rising food, energy and possibly mortgage costs, but also the “likelihood of tax hikes and even austerity measures”.
He added that for consumers, “This web of uncertainty and unrest amounts to a ‘new abnormal’.”
Consumer confidence data covered the period between October 3 and October 13, when financial market turmoil pushed up mortgage quotes and key interest rate expectations as a result of the ‘mini’ budget.
The analysis was done before Jeremy Hunt replaced Kwasi Kwarteng as chancellor, rolled back most of his tax cut proposals while warning of “stunning” cuts in government spending, and before Liz Truss stepped down as prime minister.
The spending intention subindex for major items, such as property or cars, fell 3 percentage points to its lowest level since the early months of the coronavirus pandemic, GfK reported.
Staton said the loss of consumer confidence was “particularly worrisome” in the run-up to the Christmas season, which many companies rely on to strengthen their balance sheets.
On Wednesday, official statistics showed that food inflation in Britain rose to nearly 15 percent in September, the highest since records began in 1989.
Meanwhile, UK wages are failing to keep up with inflation, registering one of the largest declines in real terms since records began in 2001.
On Friday, consumer association Which? showed that the spending confidence index in October was very low, but largely unchanged from the previous month.
According to the Which? data, 8 percent of households said they missed a housing, bill, loan or credit card payment in the past month, an increase from recent months.
Nearly two in three households reported making at least one adjustment to cover essential expenses, including cutting back on food, saving, selling assets or borrowing, according to the survey.
Official data showed that production in consumer-oriented sectors such as cinemas, bars and restaurants fell sharply in August, to 8.9 percent below pre-pandemic levels.
Linda Ellett, head of consumer markets, retail and leisure at KPMG, said mortgage rates and rents, and uncertainty over energy prices after the winter are “significant cost issues that will affect many consumers in the coming months.”
