It wasn’t a good day for economic news from the UK on Monday after UK consumer sentiment slumped to a fresh near 50-year low.
After recording three months of consecutive gains, consumer sentiment in the UK posted a decline for January.
Market research firm GfK reported that its measure of confidence dropped by 3 points to -45. January’s figure was the third-lowest reading since records began nearly half a century ago in 1974.
January is traditionally a month where, amid retail sales, consumer sentiment normally increases. Indeed, analysts had expected the Gfk consumer sentiment to post an increase this month. A Reuters poll of economists predicted an increase to -40 from December’s -42.
Despite inflation in the UK easing from its 41-year high recently, interest rates are expected to be raised from 3.5% to 4% in the foreseeable future. The Bank of England has raised interest rates a total of nine times at its last meetings and is expected to do again when it meets in February.
UK Struggling With Cost of Living Crisis
The UK is currently in the grip of a cost of living crisis. According to the ONS (Office for National Statistics), food prices in the UK leaped 16.8% year-on-year in December, which was the largest increase since 1977. Meanwhile, energy bills and the cost of fuel have surged, leaving UK households with less disposable income.
Joe Staton, GfK’s client strategy director, underlined the doom and gloom surrounding the UK economy He said of the latest UK consumer sentiment figures:
“With inflation continuing to swallow up pay rises, and the prospect of some shocking energy bills landing soon, the forecast for consumer confidence this year is not looking good.”
Joe Staton, GfK’s client strategy director
The latest figures highlight just how fragile the UK economy is at the moment as the clouds of recession loom ominously over Great Britain.
