Consumer confidence drops as inflation fears mount
Brits’ confidence about their own finances, as well as those of the Treasury, has dipped as geopolitical uncertainty mounts.
GfK’s long-running confidence index dropped by four points to -23 in April, driven by an eight-point drop in how Brits see the economy and a four-point drop in how Brits see their own finances.
“There are good reasons for this downturn,” Neil Bellamy, consumer insights director at GfK said.
“Consumers have not only been grappling with multiple April cost increases in the form of utilities, council tax, stamp duty, and road tax, but they are also hearing dire warnings of renewed high inflation on the back of the Trump Tariffs,” he added.
Bellamy said that while inflation eased in March, there’s a chance we’re “on the verge of another round of rapidly increasing prices” which would cause consumer confidence to “collapse”.
The British Retail Consortium’s confidence survey found similar results, with consumer expectations over the next three months on the state of the economy dropping significantly to -48 in April from -35 in March.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, warned that shoppers will be more cautious about spending big on items like phones in the months ahead.
A drop in consumer spending would knock many firms’ hopes of margin recovery this year.
“Even with a pause on many of the US tariffs, business and consumer confidence remains fragile,” Helen Dickinson, Chief executive of the British Retail Consortium, said.
“Many retailers are also concerned about the risk of cheap Chinese products being diverted from the US to other destinations, including the UK,” Dickinson added.