UK consumer spending anxiety rises alongside cost of living

New data from market research giant GfK has marked a sharp downturn in consumer confidence as an awareness of inflationary pressures grows.

Anxieties about cost of living increases saw the research group’s long-term Consumer Confidence Index dip five points since an early summer peak. Overall sentiment is marginally higher year-on-year, but the forecast for personal finances has dropped six points recently, indicating that consumers are becoming wary of headlines warning of stagflation.

The backdrop of fuel and other shortages in the UK, attributed mostly to both global shipping problems and a steadily visible consequence of Brexit, has prompted consumers to consider how long price rises will stick around. As a result, the Major Purchase Index has dropped three points to -6 in the most recent reading, indicating consumer may begin to reign in larger spends.

Joe Staton, Client Strategy Director GfK, commented: “On the back of concerns about rising prices for fuel and food, the growth in headline inflation, tax hikes, empty shelves and the end of the furlough scheme, September sees consumers slamming on the brakes as those already in economic hardship anticipate a potential cost of living crisis.

“All measures have declined this month and consumers are clearly worrying about their personal financial situation and the wider economic prospects for the year ahead. The Index also records a fall in the major purchase index: depressing news for hard-pressed retailers looking to build sales as they go into the key holiday period.

“When consumer confidence drops, shoppers tend to spend less, and this dampens the overall economic prospects for the UK. This really is an unwelcome picture if this continues into 2022 and beyond.”

Within the bicycle business price rises are already factored in to most suppliers’ catalogues, though few would rule out further increases in the face of significant shipping and raw material cost increases.

GfK’s study was conducted alongside 2,000 UK individuals, aged 16 or over, between September 1st to 14th.