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UK consumer confidence sinks to new record low amid economic fears

·Business Reporter, Yahoo Finance UK
·2-min read
Woman looks at food goods in a shop as UK inflation heads towards 10%. UK consumer confidence fell to the lowest level ever recorded.
UK consumer confidence fell to the lowest level ever recorded this month. Photo: Reuters/Kevin Coombs

UK consumer confidence fell to the lowest level ever recorded this month as Brits grapple with rising inflation, a sharp cost of living crisis, and a looming recession.

According to GfK’s consumer confidence barometer, the index decreased by one point to -41 in June, a new record low for the second successive month.

This month’s survey, which has been running since 1974, was conducted among a sample of 2,002 individuals aged over 16, between 1 and 14 June.

The four scores on our personal finances and the wider UK economic picture all dropped, while the measure on major purchase intentions was flat.

GfK consumer confidence barometer for June. Chart: GfK
GfK consumer confidence barometer for June. Chart: GfK

The index measuring changes in personal finances over the last 12 months decreased one point to -23, 23 points worse than June 2021, while the forecast for personal finances over the next 12 months decreased three points to -28. This was 39 points lower than this time last year.

The measure for the general economic situation of the country during the last year was down two points at -65 – 18 points lower than in June 2021.

Expectations for the general economic situation over the coming 12 months also dropped by one point to -57; this was 55 points lower than last June.

The major purchase index stayed the same during the month at -35, and the savings index dropped one point this month at +9.

Read more: Is the UK heading into a recession?

“With prices rising faster than wages, and the prospect of strikes and spiralling inflation causing a summer of discontent, many will be surprised that the index has not dropped further,” Joe Staton, client strategy director at GfK said.

“The consumer mood is currently darker than in the early stages of the COVID pandemic, the result of the 2016 Brexit referendum, and even the shock of the 2008 global financial crisis, and now there’s talk of a looming recession.

“One thing is for sure, Britain faces a stark new economic reality and history shows that consumers will not hesitate to retrench and tighten their purse strings when the going gets tough.”

It comes as UK inflation rose to 9.1% in May from 9% the month before as the cost of living crisis squeezes UK households.

It is the highest since March 1982, according to the figures from the Office for National Statistics (ONS) on Wednesday.

Inflation had already hit a 40-year high when it reached 9% the previous month. The latest figures mean inflation is almost five times higher than the Bank of England (BoE) target of 2%.

Watch: How does inflation affect interest rates?

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