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UK consumer confidence stays at historic low amid cost of living squeeze

An online energy bill. Consumer confidence is at lows of -41 amid the cost of living crisis
Consumer confidence was at historic lows amid soaring food and fuel prices, high energy bills, and rising interest rates. Photo: Press Association (PA)

UK consumer confidence remained at an historic low of -41 this month as the impact of soaring food and fuel prices, energy bills, and rising interest rates continued to darken the financial mood of the nation.

According to GfK’s barometer, the overall index score was flat in July compared to the previous month, with two measures up, one down and two staying the same.

The index measuring changes in personal finances over the last year remained constant at -23 — 22 points worse than July 2021. The forecast for personal finances over the next 12 months increased two points to -26. This was 37 points lower than this time last year.

The data also revealed that the measure for the general economic situation of the country during the last 12 months was down one point at -66, some 23 points lower than in July last year.

Read more: Inflation pushes UK borrowing to record high of £22.9bn

Meanwhile, expectations for the general economic situation over the coming year have stayed the same at -57 — 52 points lower than July 2021.

The major purchase index increased by one point in July to -34 while the savings Index was up four points this month at +13.

The GfK survey was conducted among a sample of 2,000 individuals aged 16 and over, between 1 and 12 July.

“Consumer confidence remains severely depressed this month,” Joe Staton, client strategy director of GfK said.

“Despite a two-point uptick in our hopes for our personal financial situation for the next 12 months, which might reflect optimism over imminent change at the top of the UK government, the overall index languishes at a historic low amid acute concerns for the general economic situation.

Read more: Cost of living: Top tips to save money on a UK staycation

“Against this financial backdrop, the UK electorate is looking for a new leadership with a commitment to unleashing growth, tackling inflation and cutting taxation. The successful candidate will need to deliver a much-needed shot in the economic arm of the country if they are to help improve consumer confidence.”

Linda Ellett, UK head of consumer markets, retail and leisure at KPMG, said: “Considering the consumer mood which remains low, it is perhaps surprising that spending remains robust.

“Whilst retail sales have fallen, the monthly 1% decrease in sales that we are currently seeing certainly doesn’t marry up to consumer confidence levels being at record lows, even when inflation adjusted.

"Nevertheless, the danger for the economy remains what happens in the final quarter of the year, once summer spend passes and energy prices rise further. Consumers able to spend feeling confident enough to spend will be key to mitigating those having to cut costs to make ends meet.”

Watch: How to save money on a low income