Consumer confidence plunges to near-record low

British consumer sentiment tumbled in April to its second-lowest reading since records began nearly 50 years ago, as the worsening cost-of-living crisis continues to hurt households’ confidence.

Consumer confidence index fell to -38 from -31 in March, within a whisker of an all–time low hit in July 2008, in the midst of the global financial crisis, market research firm GfK said today (22).

Only one economist had forecast such a drop in a Reuters poll that had pointed to a reading of -33. Stretches of readings of -30 and below have presaged recession on four out of five occasions since the survey started in 1974.

With consumer price inflation surging to a new 30-year high of 7 percent in March and likely to rise further, GfK‘s gauge of confidence in the future health of financial confidence slumped to a level never seen before.

The fall in consumer confidence bodes ill for future spending appetite. This matters because “how households respond to the fall in real incomes will go a long way to determining whether or not there is a recession”, reports quoted Ruth Gregory, an economist at Capital Economics, as saying.

Data from Deloitte, KPMG and Bank of America have shown similar sharp declines in consumer confidence. In a BoA survey, more than half of consumers said they had cut back on spending because of rising utility bills this month.

Most households were seeking to save costs by reducing clothes shopping and eating out, found BoA and KPMG, while a third of consumers were dipping into their savings to offset living costs.