Anxiety about soaring living costs weighs down UK consumer confidence

Intense anxiety about sharp rises in the cost of living is weighing down Brits’ confidence levels, according to fresh data published today.

Consumer confidence in the UK slid five points to minus 13 in September, driven by Brits sharpening their focus on the spectre of inflation and tax hikes looming over their living standards.

Empty shelves in supermarkets, compounded by the end of the furlough scheme dampened Brits’ outlook for the UK economy. GfK’s latest consumer confidence survey shows confidence in the economy over the next year dipped 10 points to minus 16.

Joe Staton, client strategy director GfK, said: “On the back of concerns about rising prices for fuel and food, the growth in headline inflation, tax hikes, empty shelves and the end of the furlough scheme, September sees consumers slamming on the brakes as those already in economic hardship anticipate a potential cost of living crisis.”

“When consumer confidence drops, shoppers tend to spend less, and this dampens the overall economic prospects for the UK. This really is an unwelcome picture going into 2022 and beyond.”

Weak confidence is already dragging down spending. Data from the Office for National Statistics (ONS) shows retail sales dipped 0.9 per cent in August, a larger fall than expected fall.

Shortages of raw materials caused by global supply chain snarl ups and a paucity of workers is leading to businesses struggling to deliver normal services.

A spike in the price of natural gas has triggered an energy crisis in Britain, with households facing the prospect of soaring energy costs.

These issues are putting upward pressure on prices. According to the ONS, inflation recorded its highest ever monthly rise last month, increasing to 3.2 per cent annually.

Confidence in household finances dropped 6 points over the last month.