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Consumer confidence in the UK has taken a nosedive on the back of gloomy noises coming out of the new Labour government, according to a closely watched monthly survey released this morning.
GfK recorded a seven-point fall in its September consumer confidence survey. It takes the index to -20 and back to territory not seen since the beginning of the year.
All five measures that GfK asks consumers about were down, but there were major corrections in the outlook for personal financial situation for the next 12 months (down nine points), views on the general economy for the coming year (down 12 points) and the major purchase index (down ten points).
“These three measures are key forward-looking indicators so, despite stable inflation and the prospect of further cuts in the base interest rate, this is not encouraging news for the UK’s new government,” said Neil Bellamy, GfK consumer insights director.
“Strong consumer confidence matters because it underpins economic growth and is a significant driver of shoppers’ willingness to spend.
“Following the withdrawal of the winter fuel payments, and clear warnings of further difficult decisions to come on tax, spending and welfare, consumers are nervously awaiting the Budget decisions on 30 October.”
GfK surveyed more than 2,000 individuals aged 16-plus between 30 August and 13 September.
Morning update
Strong sales of food and clothing in August helped drive overall retail sales by volume to the highest levels since July 2022.
According to the latest figures release today by the Office for National Statistics, total retail sales volumes rose 1% in August on the back of a 0.7% increase in July.
Sales volumes rose by 1.2% in the three months to August 2024, when compared with the three months to May 2024.
Food had a particularly strong month with volumes up 1.8%. This followed a rise of 0.3% in July. Year-on-year food sales volumes were up by 0.6% which the ONS said was the largest yearly increase since July 2021. It added that the growth had come mostly from supermarkets enjoying stronger sales boosted by better weather.
Non-food stores sales volumes rose by 0.6% in August, with clothing stores the big winners.
“Clearly, the high cost of living still bears down on consumers, meaning demand may dip further when energy bills rise once again in October,” warned BRC director of insight Kris Hamer.
On top of difficult trading, retail faces a disproportionate tax burden compared to other industries, holding back investment, and contributing to a decline in shops and jobs. Government must take decisive action in the upcoming Budget and introduce a 20% Retail Rates Corrector - a 20% adjustment to bills for all retail properties - to level the playing field. This would drive economic growth and restore high streets up and down the country.”
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