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Monday 13th of October 2008
July 31, 2008

Consumer confidence at 34-year low


by Kay Murchie
”Consumer

A survey has revealed that consumer confidence is at its lowest level since 1974 as soaring food and fuel prices sparks concern for the economy and personal finances.

The GfK NOP barometer of UK consumer confidence scored -39 in July, this represents the lowest level recorded since the survey commenced in 1974 and down from -34 in June.

The survey reveals the extent of consumer concern as many are worried about their own financial situation over the next 12 months, the measure dived by 9 points during the month to -18, the lowest level for over 4 years.

People are also concerned about the general economic situation with this index falling to a 15-year low of -69.

The only positive was the fact that consumers believe that now is a good time to save as this index remained positive.

Donna Culverwell of GfK NOP noted that the consumer confidence level is 4 points lower than in March 1990 when the UK was heading into the grip of the last recession.

A combination of soaring living costs, rising food and fuel prices and falling house prices means that all the confidence measures had declined.

Today, the latest Nationwide survey revealed that UK house prices have fallen for the ninth consecutive month. This represents the biggest annual drop since the building society commenced its survey in 1991.

According to Nationwide, house prices fell by 1.7% in July and fell by 8.1% on a year-on-year basis.

Yesterday, British Gas revealed price hikes of 35%, the largest ever rise for its 16 million customers. As a result, a further 1 million families will be pushed into fuel poverty if other companies follow suit.

Commenting on the figures, Howard Archer, chief UK and European economist at Global Insight, said the survey shows that consumers are cutting back and the GfK NOP survey reinforces belief that an extended period of serious consumer retrenchment is highly likely.

As people rein in their sending, the survey revealed that nearly half of people said they had started buying supermarkets’ own brand of goods, while nearly a third have started shopping at discount supermarkets.

Earlier this week, figures from the CBI revealed that sales on the High Street have slumped to their lowest level for a quarter of a century.

The CBI said the resulting balance of -36 points was the weakest since its distributive trades survey commenced in 1983. Retailers are expecting another gloomy month in August.

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