UK shopper confidence is at its lowest sustained stage in nearly 50 years, because the nation braces for a chronic recession, in line with a carefully watched survey.
The patron confidence index, a measure of how folks view their private funds and wider financial prospects, edged up solely two factors to minus 42 in December in contrast with the earlier month, mentioned analysis group GfK on Friday. The common because the index began is minus 10.
Over the previous 12 months, Britons have been hit by hovering costs which might be stretching family budgets throughout the nation. Power costs jumped after Russia’s invasion of Ukraine in February and lots of customers have been left with little cash after paying for vitality and meals payments.
For the reason that survey started in 1974, the index had by no means fallen beneath minus 40 till Might 2022, with the onset of double digit inflation. It has remained beneath that stage, marking probably the most extended interval of low confidence in nearly half a century.
Joe Staton, consumer technique director at GfK, warned “of a troublesome street forward” due to the UK’s gloomy financial outlook. “Actual wages are falling as inflation continues to chunk laborious, additional straining the discretionary funds of many households as we enter the previous couple of buying days earlier than Christmas,” he added.
Inflation eased marginally to 10.7 per cent in November from a 41-year excessive of 11.1 per cent in October. Meals inflation rose to 14.6 per cent, the very best since 1980.
The UK economy contracted within the third quarter with enterprise surveys, such because the buying managers’ index, pointing to additional financial deterioration within the final quarter.
Each the Financial institution of England and the Workplace for Finances Duty have forecast a chronic recession as excessive inflation continues to hit households’ funds in 2023.
Linda Ellett, UK head of shopper, retail and leisure at KPMG, mentioned that “while Christmas will deliver some feel-good respite, the basics which might be driving this low shopper confidence will proceed into the brand new 12 months”.
The GfK survey, based mostly on information collected over the primary 10 days of December, confirmed that Britons’ confidence of their private funds subsequent 12 months remained on the lowest stage on report.
Because of this, practically two in three folks have decreased non-essential spending and are utilizing much less vitality of their properties, in line with an ONS survey revealed on Thursday. Practically half of the respondents mentioned they have been shopping for much less meals.
Staton mentioned that with “no quick prospect of fiscal excellent news, it’s unlikely we are going to see a rebound in confidence any time quickly”.