Consumer confidence in sharp drop

The index found all five economic measures were down compared with the previous month, with people’s perception of their personal financial situation over the past year falling five points to -20.

Personal finances for the year ahead were also rated at -7 in July, down six points from June.

The results are based on a nationally representative survey of 2,000 UK adults carried out between 3rd and 13th July, with scores above or below zero showing positive or negative consumer confidence respectively.

Respondents rated the outlook for the general economic situation at -33 for the year ahead, eight points down from June, while for the previous 12 months it dropped four points to -58.

The major purchases index, which measures whether now was a good time to make a significant purchase, declined seven points to -32.

The savings index, which measures whether the financial climate is good for saving and is not included in the overall index score, rose one point to a positive score of 26.

Joe Staton, client strategy director at GfK, said: “There are clear concerns for the coming year for our personal finances and for the wider UK economy, with these measures down six and eight points, respectively.

“The recent fall in headline inflation will do little to improve the financial mood; consumers need to see falling prices and interest rates before that happens.

“Reality has started to bite and, as people continue to struggle to make ends meet, consumers will pull back from spending, as is clear from the seven-point drop in this month’s measure of major purchase intentions.

“All in all it’s bad news. People are feeling economic pain and this confidence deficit needs to be reversed before the gains this year are lost.”