UK consumer confidence is at its lowest sustained level for nearly 50 years | Daily News Byte

UK consumer confidence is at its lowest sustained level for nearly 50 years

 | Daily News Byte

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UK consumer confidence is at its lowest sustained level in nearly 50 years, as the country braces for a prolonged recession, according to a closely watched survey.

The consumer confidence index, a measure of how people view their personal finances and broader economic prospects, rose just two points to minus 42 in December from the previous month, research group GfK said on Friday. The average since the index’s inception is minus 10.

Over the past year, Britons have been hit by rising prices that are stretching household budgets across the country. Energy prices soared after Russia’s invasion of Ukraine in February, leaving many consumers with little money left over after paying energy and food bills.

Since the survey began in 1974, the index has never dipped below minus 40, with double-digit inflation starting in May 2022. It has remained below that level, marking the longest period of low confidence in nearly half a century.

A column chart of the GfK Consumer Confidence Index shows UK consumer confidence is at the lowest level for the longest period on record.

Joe Staton, director of client strategy at GfK, warned of a “difficult road ahead” given the UK’s bleak economic outlook. “Real wages are falling as inflation continues to bite hard, further straining many households’ discretionary budgets as we shop in the last few days before Christmas,” he added.

Inflation eased marginally to 10.7 percent in November from a 41-year high of 11.1 percent in October. Food inflation rose to 14.6 percent, the highest since 1980.

The UK economy shrank in the third quarter, with business surveys such as the Purchasing Managers’ Index pointing to further economic deterioration in the last quarter.

Both the Bank of England and the Office for Budget Responsibility forecast a prolonged recession as higher inflation hits household finances in 2023.

Linda Allett, UK head of consumer, retail and leisure at KPMG, said that “while Christmas will bring some relief, the fundamentals driving this low consumer confidence will continue into the new year”.

The GfK survey, based on data collected in the first 10 days of December, showed Britons’ confidence in their personal finances next year remained at the lowest level on record.

As a result, almost two in three people have cut back on non-essential spending and are using less energy in their homes, according to an ONS survey published on Thursday. Almost half of the respondents said they buy less food.

Staten said that “with no immediate prospect of fiscal good news, it is unlikely that we will see a recovery in confidence anytime soon”.

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