Consumer confidence still a ‘far cry’ from optimism of summer 2024
Consumer confidence ticked up slightly in August but remains far below where it was last summer, when Labour was elected in landslide victory.
Brits’ expectations over the next three months of their personal financial situation have improved one point to minus six, a seven-point drop from August 2024, according to new figures from the British Retail Consortium (BRC).
Sentiment about the state of the UK economy fared much worse: nearly half of Brits expect the economy to worsen over the next three months, with only 17 per cent expressing optimism.
“Consumers see rising prices, gap-toothed high streets, and reports of large businesses falling into administration,” Helen Dickinson, chief executive of the BRC, said.
Dickinson added that food inflation has encouraged pessimism: “Rising food inflation will make it harder to lift consumer confidence out of the doldrums.”
Food inflation is predicted to hit six per cent by the end of the year, fuelled by an increase in severe weather events due to global warming as well as a steep increase in costs for producers.
Food inflation to add £275 to annual bills
The average household spend at the grocers has now reached £5,283 a year, which could rise by £275 by the end of the year “if people’s shopping habits stay the same”, according to analysis by Worldpanel.
Overall inflation crept up to 3.6 per cent in July, making it unlikely that the Bank of England will cut interest rates again before the end of the year.
Which?’s Consumer Insight Tracker showed that confidence has tumbled by 31 points over the last year, from an average of minus nine between May and July 2024 to an average of minus 40 between May and July this year.
Which? said the figures showed a “significant fall” to some of the lowest levels seen since early 2023, when the cost-of-living crisis was in the headlines and inflation was in double figures.
Both the BRC and Which? found that the biggest fall in confidence has been amongst older generations.