Soaring household bills and fears of a looming interest rate hike have driven consumer confidence to its lowest level since Britain was last facing recession 18 years ago, a survey has said.
The GfK NOP barometer of UK confidence scored minus 34 in June, down five points from May and the lowest reading since March 1990, just before the country’s last recession. It is the tenth month in a row that the survey’s confidence measure has fallen, with consumers being battered by soaring petrol prices and grocery bills, as well as falling house prices.
Rachael Joy, of GfK’s consumer confidence team, said: “This month the index score continues to tumble and is almost at its lowest level since the survey began in 1974.
“With rising inflation, gloomy forecasts for interest rates and soaring fuel, utility and food prices dominating the front page headlines, it’s no surprise that confidence in the general economy is almost in freefall. It seems unlikely that this trend will reverse in the near future.”
Households face a potential rise in interest rates as the Bank of England struggles to get a lid on soaring inflation.
Last month the Consumer Prices Index rose by 3.3 per cent thanks to soaring fuel and food costs. With official retail sales figures also showing an unexpected rise last month, the combined data saw economists predict an interest rate rise may be in the pipeline to dampen down consumer spending.
In one of the gloomiest surveys yet, GfK said all five of its confidence measures had dropped as a result of the economic concerns, with the index relating to general economic expectations over the next 12 months among those faring the worst.
The measure dropped to minus 45 this month, compared to minus 39 in May. It is the lowest reading since the index started in 1982.
The index measuring expectations for respondent’s personal financial situation over the next year fell by five points to minus nine – a level not seen since September 1995.
Other downbeat results saw the major purchases index – which measures the appetite for buying big items like fridges and washing machines – fall by three points to minus 35. This score is also the lowest on record.