Yahoo Finance UK consumer confidence near 50-year low as shoppers grapple with rising costs
UK consumer confidence remained near 50-year lows, rising slightly in October as Britain contends with soaring food, energy and mortgage costs and political chaos.
According to GfK’s consumer confidence barometer, the index was up two points but continues to languish at an overall score of -47, from the minus 49 the previous month.
This month's reading was only marginally better than September, which marked the lowest level since records began in 1974 as the cost of living surged.
Read more: Millions struggling to pay bills as cost of living surges
The statistics covered the period between 3 October and 13 October, when turbulence in the financial markets pushed up mortgage costs and policy interest rate expectations on the back of the mini-budget.
Chancellor Jeremy Hunt dropped most of outgoing prime minister Liz Truss's economic agenda.
Hunt also said that he will reduce public spending, and warned of "difficult decisions" on tax as he tries to restore the UK's economic policymaking credibility.
On Wednesday, official figures showed that Britain’s food inflation increased to nearly 15% last month — the highest on record since Office for National Statistics' records began in 1989.
Joe Staton, client strategy director at GfK, said: "Households are not just running scared of burgeoning energy and food prices, and the prospect of further base rate rises increasing mortgage costs, they are now facing the likelihood of tax rises and even austerity measures.
"For ordinary consumers this web of uncertainty and turmoil amounts to a 'new abnormal'. The negative environment will deflate future spending plans, and cautious consumers could easily slow the UK economy still further.
"Consumers, like governments, are just as capable of U-turns, and today’s economic headwinds indicate a long, hard winter."
Read more: Energy bills could hit £4,000 after Jeremy Hunt U-turns on support
A three-point fall in the sub-index of consumers' willingness to make expensive purchases — an indicator of confidence in buying big ticket items — showed how shoppers' caution could slow the UK economy which already looks set to go into a recession.
This will especially worrying for retailers in the crucial Christmas shopping quarter, as retailer rely on the season to strengthen their balance sheets.
Confidence in personal finances for the next year jumped six points to -34, but remains 35 points lower than this time in 2021.
Expectations for the general economic situation over the coming 12 months improved by seven points to -61, although this is still 35 points lower than last October.
Linda Ellett, UK head of retail and leisure consumer markets at KPMG, said that mortgage rates and rents, and energy price uncertainty after the winter are "significant cost concerns that will play on the minds of many consumers over the coming months".
Separate data from consumer group Which? found the spending confidence index was very low in October, but largely unchanged from the previous month.
It showed that 8% of households said they missed a housing, bill, loan or credit card payment in the last month, an increase on recent months. Meanwhile, almost two in three households reported having made at least one adjustment to cover essential spending, including cutting back on food, selling possessions or borrowing money and dipping into savings, according to the research.
Watch: How to save money on a low income
