GfK: Consumer confidence sinks to record low as economic misery mounts

Confidence levels among Britain’s consumers sank to a new record low this month as households struggled with the accelerating cost of living and faced the prospect of months of strikes, a survey showed on Friday.

Market research firm GfK said its consumer morale index, launched 48 years ago, fell to -41 in June from -40 in May, below levels that have previously preceded recessions.

Economists polled by Reuters had expected the index to hold at -40.

“With prices rising faster than wages, and the prospect of strikes and spiralling inflation causing a summer of discontent, many will be surprised that the index has not dropped further,” said Joe Staton, client strategy director at GfK.

“The consumer mood is currently darker than in the early stages of the Covid pandemic, the result of the 2016 Brexit referendum and even the shock of the 2008 global financial crisis, and now there’s talk of a looming recession.”

Since the previous GfK report in May, Chancellor Rishi Sunak had announced a further round of support for households facing the highest inflation since the early 1980s and which is expected to peak at above 11 per cent in October.

Last week, the Bank of England raised interest rates for the fifth time since December and said it was prepared to act “forcefully” if needed.

Another survey that came out today has revealed that Britain’s private sector business activity is languishing at its lowest level for more than a year on high inflation, increasing the likelihood of recession.

Yesterday, US bank Citi predicted that British food price inflation is set to hit 20 per cent in the first quarter of next year. Last week industry forecasters the Institute for Grocery Distribution (IGD) predicted food price inflation would peak at 15 per cent in the coming months.