U.K. consumers turned more pessimistic in September as high inflation and rising interest rates outweighed any effect from recent government measures to freeze households’ rising energy bills.
The consumer-confidence barometer compiled by research firm GfK decreased to minus 49 in September from minus 44 in August, the lowest level since the survey began in 1974 and missing economists expectations of a slight improvement.
The decline in confidence was mainly driven by sharp falls in the forward-looking indicators, with prospects for both personal finances and the state of the economy over the next year severely depressed.
“These numbers are where many forecasters look for signs of economic optimism among consumers and the results deliver very bad news in that respect,” GfK client strategy director Joe Staton said.
Rapidly rising food prices, domestic fuel bills and mortgage payments are weighing heavily on consumers’ moods, he said. U.K. inflation eased slightly in August to 9.9% on lower gasoline prices, but remained close to its highest rate in four decades.
The survey data, which was collected between Sept. 1 and 14, doesn’t show any significant boost from the government’s plan to cap household energy prices over the next two years which will start in October.
There was also no significant difference in responses when comparing results prior to the death of Queen Elizabeth II on Sept. 8 with results after that date, GfK said.
The U.K. government’s mini-budget and the longer-term agenda to drive the economy and help rebalance household finances will be the first major opportunity to deliver an improvement in consumer confidence, Staton said.
“It will also be a major test for the popularity of Liz Truss’s new government,” he said.