Confidence among UK consumers has hit the lowest level since records began nearly five decades ago, according to a new report.
The worrying drop in consumer confidence was revaled by business intelligence firm Growth from Knowledge (GfK).
GfK’s long-running Consumer Confidence Index decreased two points to minus 40 in May.
The figure marks the lowest score since records began in 1974.
The data comes as UK inflation has soared to a 40-year high amid skyrocketing food and fuel prices.
The news is adding to the financial pressure already impacting millions of British households.
According to the Office of National Statistics (ONS), the Consumer Price Index (CPI) inflation rose to 9 percent in the 12 months to April, up from an already-high 7 percent in March.
There is widespread pessimism over the situation of the UK economy.
Confidence in the general economic situation has fallen to minus 63 looking back over the past year, and minus 56 for the next 12 months.
Consumer confidence is now weaker than in the darkest days of the global banking crisis, the impact of Brexit on the economy, or the COVID shutdown, the report shows.
The major purchase index, an indicator of confidence in buying big-ticket items, has now fallen to minus 35, reflecting the latest “dismal” set of retail sales figures, GfK said.
Confidence in personal finances over the past 12 months fell three points to minus 22, 18 points worse than this time last year.
GfK client strategy director Joe Staton said consumer confidence is now lower than in the worst crises in the last five decades.
“May’s result is one point lower than the previous record set in July 2008 when the headline score plunged to minus 39,” Staton said.
“This means consumer confidence is now weaker than in the darkest days of the global banking crisis, the impact of Brexit on the economy, or the COVID shutdown.”
Staton added that the outlook for consumer confidence is “gloomy,” and “nothing on the economic horizon shows a reason for optimism any time soon.”
Accounting firm KPMG said that businesses could face major problems if consumer confidence continues to slip in the coming months.
Linda Ellett, KPMG’s UK head of retail and leisure consumer markets, said: “The cost-of-living squeeze is, of course, feeling tighter for some consumers than others. Among those we’ve surveyed, one-third of consumers that started 2022 with savings are dipping into them to help meet their monthly essential costs.
“But two-thirds of consumers with savings still plan to spend some on the things that they want in 2022.
“It’s looking vital for the high street that in the coming months this group remains willing and able to spend.”
Free market think tank the Institute of Economic Affairs (IEA) has urged the government to boost consumer confidence by offering help to “protect the most vulnerable.”
IEA Economics Fellow Julian Jessop said that consumer confidence is now “so fragile that it may be too risky to delay the announcement of additional help until the autumn.”