LONDON, April 22 (Reuters) – British consumer sentiment plunged in April to the second-lowest on record nearly 50 years ago, as the deepening cost-of-living crisis hurt household confidence in the economy and their personal finances.
Market research firm GfK announced on Friday that its consumer confidence index fell to -38 from -31 in March, just a hair’s breadth from an all-time low in July 2008 amid the global financial crisis.
Only one economist had predicted such a drop in a Reuters poll, which pointed to a reading of -33. Ranges of readings of -30 and below have predicted a recession four out of five times since the survey began in 1974.
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UK consumer confidence nears an all-time low in April: GfK
As CPI inflation rose to a new 30-year high of 7% in March and is likely to rise further, GfK’s measure of confidence in the future health of financial confidence plummeted to unprecedented levels.
The survey underscored the growing concerns of some Bank of England officials about slowing demand in the economy, despite inflation being well above its 2% target.
GfK reported a sharp drop in consumer purchase intentions. A separate survey by auditor KPMG found that around a third of consumers had cut spending this year.
“This is bad news for consumer confidence and with little prospect of economic relief on the horizon, we can only forecast further declines in the index over the coming year,” said Joe Staton, Client Strategy Director at GfK.
Last month, Britain’s government watchdog said consumer price inflation would be heading towards 9% later this year as it forecast living standards in 2022 would fall by the most since at least the 1950s.
The BoE has raised interest rates three times since December and financial markets expect it to hike again to 1.0% in May, even as the economy heads for a slowdown.
The survey’s measure of confidence in the economy fell to a point from the record low set in April 2020, when the first COVID-19 lockdown brought much of the UK economy to a sudden halt.
A closely-watched business survey from S&P Global, due at 08:30 GMT, will provide further clues as to whether the collapse in consumer confidence is starting to affect business activity.
Last week, Tesco (TSCO.L), Britain’s largest retailer, warned of a fall in profits this fiscal year as rising inflation puts pressure on the supermarket group and its customers alike. Continue reading
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reporting by Andy Bruce; Editing by David Milliken
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