Consumer confidence in the U.K. declined for the fourth consecutive month as the cost-of-living crisis and uncertainty stemming from the war in Ukraine hit households’ mood.
The consumer-confidence barometer compiled by research firm GfK fell to minus 31 in March from minus 26 in February, the lowest level since November 2020, when the country was dealing with a surge in Covid-19 cases.
Economists polled by The Wall Street Journal expected the indicator to decline to minus 30.
“Consumers across the U.K. are experiencing the impact of soaring living costs with 30-year-high levels of inflation, record-high fuel and food prices, a recent interest-rate hike and the prospect of more increases to come, and higher taxation too,” GfK’s Client Strategy Director Joe Staton said. “All against a background of stagnant pay rises that cannot compensate for the financial duress.”
The U.K. inflation rate edged further up in February to 6.2%, a three-decade high. Economists expect prices to accelerate further in the coming months as the jump in energy prices feeds through households’ utility bills in April, and as the war in Ukraine exacerbates price pressures for other commodities.
In March, all five measures that form the headline confidence index fell compared with the previous month. The largest declines were seen in Britons’ expectations regarding their personal finances and the general economic situation for the year ahead as well as the major purchase index, which gauges demand among shoppers for big-ticket items.
“A wall of worry is confronting consumers this month and there is an unmistakable sense of crisis in our numbers,” Staton said. “The outlook for consumer confidence is not good; it’s certain there’s more bad news to come.”
The GfK’s survey was carried out between March 1 and 14, its first such poll that fully captures the impact of the war in Ukraine.