Consumer confidence nosedives amid cost of living crisis

Consumer confidence has continued to nosedive as the cost of living crisis deepens, a long-running survey shows.

GfK’s Consumer Confidence Index fell five points to minus 31 in March as consumers confront a “wall of worry” amid 30-year-high levels of inflation.

It is the fourth month in a row that the survey’s headline figure has dropped, to a level last seen in October and November 2020 when Covid numbers were rising.

Confidence in personal finances over the next 12 months fell four points to minus 18 – 28 points lower than this time last year.

Expectations for the general economic situation over the coming year dropped by six points to minus 49 – 32 points lower than March last year.

The major purchase index, a measure of confidence in buying big ticket items, decreased by nine points to minus 24, 13 points lower than it was this month last year.

GfK client strategy director, Joe Staton, said: “A wall of worry is confronting consumers this month and there is an unmistakable sense of crisis in our numbers.

“Consumers across the UK are experiencing the impact of soaring living costs with 30-year-high levels of inflation, record-high fuel and food prices, a recent interest-rate hike and the prospect of more increases to come, and higher taxation too – all against a background of stagnant pay rises that cannot compensate for the financial duress.

“Confidence in our personal financial situation and in the wider economy are severely depressed while the daily news of unimaginable suffering from a horrifying war in Europe and rising Covid numbers at home is adding to the bleak mood.

“The outlook for consumer confidence is not good; it’s certain there’s more bad news to come.”

Linda Ellett, head of retail and leisure consumer markets at KPMG, said: “As inflation and the impact of war in Ukraine causes prices to rise, it’s little surprise that consumer confidence continues to fall.

“Consumers are being forced to take steps to balance their budget, with eating out, clothing, takeaways and the weekly shop the main targets for spending reduction.

“Those fortunate enough to have saved during the pandemic started the year sitting on the bulk of those savings due to uncertainty, but the certainty of rising costs means many will be dipping into those savings to help meet their more expensive cost of living.”