‘How long can the pain continue?’ Consumer confidence falls again
Consumer confidence has fallen to its lowest level in more than two years, as fears grow that the UK economy could be ravaged by soaring inflation caused by the Iran war.
A closely-watched survey conducted by research firm GfK found consumer confidence dropped by four points to -25 in April.
The index is another warning that Brits are preparing for the knock-on effects of the Middle East conflict to leave them worse off, after inflation jumped to 3.3 per cent in March.
The four-point drop in consumer confidence is the biggest seen in a year, bringing the index to its lowest level since October 2023.
This is the third consecutive drop in the long-running index, following falls of two points in March and three points in February.
Attitudes towards economy slump
The worsening outlook was driven by Brits’ gloomy opinions on the country’s economic performance over the past year, as this measure dropped by eight points just this month, taking the indicator to -51.
Attitudes towards how the UK’s economy will perform in the coming months are hardly any rosier, with this measure falling by six points to -43.
Brits’ sentiment about their personal financial situation in the past year and the year to come both dropped in April, down by four and five points respectively.
The savings index was the only measure which improved – up five points to 32 – in an indication that people are stockpiling cash to weather them through a difficult couple of months.
Neil Bellamy, director of consumer insights at GfK, said: “Everyone is grappling with rapid price rises, especially at the fuel pumps, which are taking a dent out of household budgets, and people know further price hikes are coming.
“While the Gulf crisis is intensifying pressures, much of the current strain reflects earlier domestic cost increases. How long can all this disruption and pain continue?”
Brits brace for summer holiday woe
Susannah Streeter, chief investment strategist at Wealth Club, said Brits are preparing for gloomy times in the near term, as an impending jet fuel shortage risks cancelling summer holidays.
Leading British airlines wrote to the government this week, calling on Labour to suspend environmental regulations and cut taxes on flying as they prepare for higher costs.
Top German airline Lufthansa cut 20,000 flights this week as it braced for fuel shortages.
Brits are also trying to cut down on spending, Streeter said: “Inflation has already started marching higher again, and shoppers are becoming wary about spending on non-essential items.”
On Thursday, the boss of Sainsbury’s said there’s “no doubt” the Iran war will cause “pressure on food prices,” as a leading industry body warns of double-digit food inflation.