UK consumer confidence “continues to nosedive” as surging inflation causes a cost-of-living crisis, a survey revealed Friday, as the government faces pressure to better ease the financial pain. GfK’s Consumer Confidence Index fell five points to minus 31 in March — a fourth monthly drop in a row, as separate official data showed a fall in UK retail sales.
The last time consumer confidence was this low was in the final quarter of 2020 when Covid numbers were rising, the data analyst group added.
“A wall of worry is confronting consumers this month and there is an unmistakable sense of crisis in our numbers,” said Client Strategy Director GfK, Joe Staton.
“Consumers across the UK are experiencing the impact of soaring living costs with 30-year-high levels of inflation… against a background of stagnant pay rises that cannot compensate for the financial duress.”
Staton said that confidence in people’s personal financial situation and in the wider economy were “severely depressed” also owing to the Ukraine war and rising Covid numbers across the UK.
“The outlook for consumer confidence is not good; it’s certain there’s more bad news to come,” he predicted.
The GfK survey, conducted on 2,000 people aged above 16, came as official data showed UK retail sales dropped in February as soaring inflation put the brakes on most purchases.
Bucking the trend, car fuel purchases were above pre-pandemic levels for the first time despite rocketing prices as the economy reopens from Covid lockdowns. And clothes purchases jumped by more than 13 percent as workers return to offices, the Office for National Statistics noted. Overall, however, UK retail sales volumes contracted by 0.3 percent last month compared with January, the ONS said.
“The squeeze on household budgets is set to worsen over the coming months, exerting further downward pressure on retail sales,” said Karl Thompson, economist at Centre for Economics and Business Research.
Prime Minister Boris Johnson on Thursday acknowledged the government would have to do more to help Britons struggling with rocketing costs.
He spoke as finance minister Rishi Sunak faces pressure from within even the ruling Conservative party for not going far enough in his budget update this week, as the government forecast that UK inflation would reach a 40-year high by the end of 2022.
Johnson told LBC radio that “as we go forward, we need to do more” and “the cost of living is the single biggest thing we’re having to fix, and we will fix it”.
Chancellor of the Exchequer Sunak on Wednesday unveiled measures to help household finances, including a cut on fuel duty and an easing of the tax burden for the lowest earners.
But he warned that Britain’s economy would grow far more slowly than expected this year because of the Ukraine war and soaring global inflation.
Countries worldwide are battling surging inflation fuelled by rocketing commodity prices in the wake of Russia’s invasion of its neighbour and after countries reopened their economies from pandemic lockdowns.
In Europe’s biggest economy, Germany, the coalition government on Thursday unveiled a slew of temporary measures to ease the burden of soaring petrol and heating bills, from a 300-euro ($330) energy subsidy to ultra-low public transport fares.