UK consumer confidence continues to deteriorate as the war in Ukraine and inflation dampen sentiment

Consumer confidence in the UK fell for the fourth straight month as the cost of living crisis and uncertainty surrounding the war in Ukraine weighed on household sentiment.

The consumer confidence barometer, produced by research firm GfK, fell from minus 26 in February to minus 31 in March, the lowest since November 2020, when the country was grappling with a spike in Covid-19 cases.

Economists polled by the Wall Street Journal expected the indicator to drop to minus 30.

“Consumers across the UK are feeling the impact of rising living costs, with 30 years of high inflation, record high fuel and food prices, a recent interest rate hike and the prospect of further interest rate hikes and higher taxes,” said Joe Staton, Client Strategy Director at GfK. “All of this against the background of stagnant wage increases that cannot compensate for the financial burden.”

UK inflation rose further to 6.2% in February, a three-decade high. Economists expect prices to accelerate further in the coming months as April’s surge in energy prices affects household utility bills and the war in Ukraine intensifies price pressures on other commodities.

In March, all five measures that make up the overall confidence index fell from the previous month. The biggest declines were in Britons’ expectations for their personal finances and the general economic situation for the coming year, as well as the Major Purchase Index, which measures buyers’ demand for high-priced items.

“Consumers are facing a wall of concern this month, and there’s an unmistakable sense of crisis in our numbers,” Staton said. “The outlook for consumer confidence is not good; there will surely be more bad news.”

Conducted between March 1st and 14th, the GfK survey is the first such survey to fully capture the impact of the war in Ukraine. UK consumer confidence continues to deteriorate as the war in Ukraine and inflation dampen sentiment

Brian Lowry

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