UK consumer confidence hits record low

The confidence of UK consumer about future has hit a record low in August due to the soaring cost-of-living and bleak economic prospects. A "sense of exasperation" about the economy was the biggest driver behind the fall, according to GfK's Consumer Confidence index. Recent data showed that prices rose at the fastest pace in 40 years in July and the UK is heading for recession.
 
Meanwhile, retail sales volumes fell by 1.2% in the three months to July. The Office for National Statistics (ONS) said people were continuing to cut back on non-essential spending, in particular clothing and household goods.
 
Rachel Barber, legal partner and retail specialist at accountancy firm Deloitte said that because people are pessimistic about the state of the economy, many people "are now postponing major purchases such as electricals and furniture". Fuel sales also declined in July as people cut down on travel, deterred by petrol and diesel prices as well as the recent hot weather.
 
Sales volumes nudged up slightly in July, by 0.3%, after a small fall in June, but overall figures show sales have been on a downward trend since summer 2021. The GfK consumer confidence barometer, which surveys the public about their opinion of the economy, was at its lowest level this month since records began in 1974. "These findings point to a sense of capitulation, of financial events moving far beyond the control of ordinary people", said Joe Staton, GfK's client strategy director.
 
The Bank of England now expects the UK economy to fall into recession later this year and forecasts the downturn will last for 15 months. The cost-of-living crisis is being driven by higher fuel, energy and food prices. These increases are putting a squeeze on people's finances, as wages fail to keep up.
Energy and fuel prices had been rising even before Russia's invasion of Ukraine as economies started to recover from the coronavirus pandemic, and the conflict has pushed up prices further.