Consumer confidence dropped in June, according to the latest surveys, as people worried about the effects of rising inflation, low wage increases on their finances, and existing debt management problems.
According to this month’s GfK NOP consumer confidence survey, the index for consumer confidence fell by around four points to -25. This reading is believed to be the lowest it has been since January 2011, and it is much lower than the average level of -8. Even in May 2011, consumer confidence was at -21.
The survey also revealed that less consumers think that now is a good time to start saving, as well as for making major purchases. This was supported by the savings index, which is five points lower compared to the same time last year, and by recent data released by the Office for National Statistics. The ONS revealed that savings levels have dropped this year, with families having no spare cash to put aside after paying bills, meeting monthly expenses and tackling debt problems.
Howard Archer, UK & European Chief Economist for IHS Global Insight, commented on the recent findings, saying:
“All components of the consumer confidence index saw deterioration in June, with consumers more pessimistic about the outlook for the economy for the next 12 months and its performance over the past year.
“The renewed drop in consumer confidence in June reinforces belief that consumers will be very cautious in their spending over the coming months as their purchasing power remains under severe pressure from high inflation, low wage growth and tighter fiscal policy.”
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