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UK shopper confidence falls to file low in September


UK shopper confidence has defied expectations of an enchancment and fallen to a brand new all-time low, as households wrestle underneath the stress of the price of dwelling disaster.

The buyer confidence index, a intently watched measure of how folks view their private funds and wider financial prospects, dropped 5 share factors to minus 49 in September, analysis group GfK mentioned on Friday. That was the bottom since information started in 1974.

Joe Staton, GfK shopper technique director, mentioned confidence had “tumbled” in September to a brand new low as households “buckl[ed] underneath the stress of the UK’s rising price of dwelling disaster pushed by quickly rising meals costs, home gas payments and mortgage funds”.

The autumn defied expectations of a small rise to minus 42 forecast by economists polled by Reuters, who thought there could be some enchancment following the authorities’s £150bn package deal geared toward freezing family power payments.

Line chart of Index showing UK consumer confidence fell to a record low in September

The info come the day after the Financial institution of England lifted rates of interest by 50 foundation factors to 2.25 per cent, the very best since 2008, which means borrowing will turn into costlier for companies and households.

“For customers already struggling to maintain their family funds in test, the elevated price of borrowing on account of the speed rise . . . could signify the breaking level, resulting in the acceleration of lower in demand,” mentioned James Brown, managing companion at world consultancy Simon-Kucher & Companions.

Incorporating the power payments freeze, the BoE expects UK inflation to peak at 11 per cent in October from its present 9.9 per cent, a close to 40-year excessive, additional eroding households’ actual incomes.

The info additionally comply with affirmation, forward of Friday’s mini-Price range, that the federal government will from November reverse the 1.25 per cent rise in nationwide insurance coverage contributions that was launched in April.

Staton mentioned the “mini-Price range, and the longer-term agenda to drive the economic system and assist rebalance family funds, might be a serious take a look at for the recognition of Liz Truss’s new authorities”.

The GfK index, based mostly on interviews collected within the first two weeks of the month, confirmed scores in relation to 4 of the 5 questions posed, which contact on private funds and the broader financial image, at file lows.

Ahead-looking indicators, which monitor expectations for the following 12 months, registered the biggest fall, dropping 9 share factors for private funds and eight share factors for the economic system.

Economists anticipate record-low shopper confidence to end in falling spending, a pattern registered by the BoE in its brokers survey printed on Thursday.

It confirmed that meals retailers reported prospects choosing cheaper items and chopping again on non-essential gadgets, comparable to confectionery. Low cost chains gained market share, whereas gross sales of home items, comparable to furnishings, electrical items and home-improvement merchandise, fell.

Clothes gross sales had been supported by the return to the workplace, however in hospitality, gross sales had been down on pre-pandemic ranges. Vacation reserving additionally weakened and home tourism was restricted by greater petrol costs.

Demand was robust, nevertheless, for monetary companies and authorized recommendation, comparable to tax planning, fairness launch, debt consolidation and early compensation. Third sector organisations additionally reported a big rise in folks in search of debt recommendation.

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