Yahoo Finance UK consumer confidence falls amid inflation and interest rate concerns
UK consumer confidence fell in January amid inflation concerns, rising fuel bills, and interest rates.
According to GfK’s long-running index, consumer confidence decreased four points to -19 this month as the rising cost of living became the paramount consumer concern.
The data also showed that all five measures were down in comparison to its previous announcement on 17 December.
This included a decrease in confidence regarding personal financial situation over the last 12 months, and also the next year, as well as a decline in confidence about the general economic situation over the past year, and the next 12 months, and the major purchase index.
The survey was conducted among a sample of 2,000 individuals between 4 and 12 January. Quotas are imposed on age, sex, region and social class to ensure the final sample is representative of the UK population.
Consumers' views on their personal financial situation over the last 12 months decreased one point to -6, while the forecast for personal finances over the next year decreased three points to -2. This was four points lower than this time last year.
The measure for the general economic situation of the country during the last 12 months also came in eight points lower at -47, but 20 points higher than in January 2021.
Expectations for the general economic situation over the coming 12 months dropped by eight points to -32; 12 points higher than January 2021.
The major purchase index decreased by four points to -10 in January, while the savings index went up by one point to +15 in January, the data showed. This was three points lower than this time last year.
Read more: What higher inflation means for savers and investors
“The UK’s financial pulse weakened further this January driven by concerns over personal finances and the general economic situation, Joe Staton, client strategy director, at GfK said.
“Despite some good news about the easing of COVID restrictions, consumers are clearly bracing themselves for surging inflation, rising fuel bills and the prospect of interest rate rises.
“The four-point fall in the major purchase index certainly suggests people are ready to tighten their belts.
Linda Ellett, head of consumer markets, leisure and retail at KPMG UK, said: “The rising cost of living has become the paramount concern that we currently hear from consumers. Our recent survey found that one third of consumers said they will reduce their outgoings in 2022 and half will make sure they don’t spend more than in 2021. As costs rise, the number of consumers cutting back spending may rise further.
“The cost of living squeeze is also causing those who have been able to save during the pandemic to either sit on their savings, use them to offset costs, or to be conservative with how much of it they are willing to spend this year.
“All of this means that businesses are operating in an increasingly competitive landscape for share of wallet.”
Watch: What is inflation and why is it important?
