Consumer confidence in the U.K. fell in February to its lowest level in more than a year as Britons’ expectations for the next 12 months deteriorated sharply on the back of broadening price pressures.
The consumer-confidence barometer compiled by research firm GfK dropped to minus 26 in February from minus 19 the previous month, the lowest level since January 2021. The indicator is well below economists’ expectations, who had forecast a slight decline to minus 20 in a Wall Street Journal poll.
Consumer confidence in the U.K. has declined for three consecutive months to one of the worst points since the COVID-19 pandemic hit as the spread of the Omicron variant and higher prices soured moods.
“Fear about the impact of price rises from food to fuel and utilities, increased taxation and interest rate hikes has created a perfect storm of worries that has shaken consumer confidence,” GfK’s Client Strategy Director Joe Staton said. “Slowing consumer spend slows the wheels of the U.K. economy so this is unwelcome news,” he said.
All five measures that form the consumer-confidence barometer fell in February, with steep declines particularly in the forward-looking indicators that gauge sentiment over the next year on both the general economy and personal finances.
The U.K.’s rate of inflation accelerated in January to 5.5%, holding at a three-decade high, as energy prices remain elevated and supply chains continue to struggle with the lingering effects of the COVID-19 pandemic.
The GfK’s survey was carried out between Feb. 1 and 14. At the beginning of the month, the Office of Gas and Electricity Markets said the rise in global gas prices will lead to a 54% increase in energy bills from April for around 22 million customers.
“There’s clear anxiety in these findings as many consumers worry about balancing the household books at the end of the month without going further into debt,” Staton said.
The good news on falling Covid-19 cases and the easing of restrictions seems to be doing little to lift the public mood, he said. The U.K. government has ended all remaining COVID-19 restrictions in England this week.