An “extraordinary collapse” in consumer confidence has wiped out gains seen over the summer, according to GfK’s monthly barometer.
Brisk autumn weather and the end of the ‘Burnham bounce’ led to largest single-month fall in confidence since the onset of the pandemic.
“The last time we saw an 11-point drop was in July 2016, following the Brexit vote,” said Gfk consumer insights director Neil Bellamy.
He labelled the collapse “damaging findings” given the UK government’s priority of economic growth.
No single economic event drove the decline, and weakness came across the full spectrum of income, age and gender demographics. All measures of confidence were lower.
“Relentless cost-of-living pressures, against an international backdrop of unresolved regional conflicts that are themselves contributing to domestic inflation now at 3.5%, appear to have swept aside the nascent optimism we saw following the appointment of a new UK prime minister this summer,” Bellamy said.
“Headline consumer confidence is now back to the level seen in April, May and June of this year and the summer’s buoyant mood has evaporated. The speed of this deterioration is alarming.”
In September, inflation rose more than expected to reach 3.5%, after a re-escalation of the Iran conflict early in the month pushed fuel prices higher.
And while food inflation has remained steady at just 1.3% for the past three months, the FDF and IGD have both warned of a prolonged period of price rises throughout 2027 and 2028. They forecast inflation to plateau around 5.5% or higher for much of next year.
Official retail sales figures released this morning by the ONS showed overall sales growth driven by smaller retailers, while actiivty for larger businesses was more subdued.
”While spending held up better in some areas such as health and beauty, sales of clothing & footwear fell due to the unseasonably warm weather,” said BRC lead economist Harvir Dhillon.
”With consumer confidence wobbling, the Chancellor must use the Budget to give consumers and retailers the breathing space they need.”
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