UK consumer confidence has hit its lowest level since records began in 1974, driven by soaring prices and bleak economic prospects, according to the GfK Consumer Confidence index.
The index, which surveys public opinion on the economy, fell to a record low in August. Joe Staton, GfK's client strategy director, described the findings as pointing to a 'sense of capitulation' among ordinary people as financial events move beyond their control.
Official data shows inflation reached 10.1% in July, the highest in 40 years, and is expected to exceed 13% later this year when the energy price cap rises. The Bank of England forecasts the UK will enter a recession lasting 15 months.
Retail sales volumes fell by 1.2% in the three months to July, with consumers cutting back on non-essential items such as clothing and household goods. Fuel sales also declined as people reduced travel due to high petrol and diesel prices.
Helen Dickinson, chief executive of the British Retail Consortium, noted that while July saw a slight uplift in sales due to summer sunshine, most retailers are still experiencing falling volumes amid rising inflation.
Clothing retailer Joules issued a profits warning, citing a 'material softening' of trade due to warm weather and subdued consumer demand driven by the cost-of-living crisis. The company is in discussions with rival Next about a potential £15m stake.
