Confidence slumps as UK consumers 'buckle' under cost of living crisis

The GfK Consumer Confidence Index fell five points in September to a record low of -49, the worst overall index score since records began in 1974.

Within that, the personal financial situation index for the next 12 months, which measures consumers’ expectations, slid nine points to -40, while the general economic situation index for the next year lost eight points to -68.

The major purchase index, which indicates how likely consumers are to spend on big ticket items, was unchanged at -38.

Joe Staton, client strategy director at GfK, said the falls seen on the forwarding-looking indices were "especially worrying".

He continued: "These numbers are where many forecasters look for signs of economic optimism among consumers, and the results deliver very bad news in that respect.

"Consumers are buckling under the pressure of the UK’s growing cost of living crisis, driven by rapidly rising food prices, domestic fuel bills and mortgage payments. They are asking themselves when and how they situation will improve."

On Thursday, the Bank of England increased interest rates for the seventh consecutive time as it sought to curb surging inflation. The Monetary Policy Committee increased the cost of borrowing by 50 basis points to 2.25%, its highest level since 2008, although the hike was smaller than many economists had forecast.

The BoE also warned that the UK was likely already in recession.

Later on Friday, newly appointed chancellor Kwasi Kwarteng is set to address the cost of living crisis with a mini-budget. It is though the statement will end the cap on bankers’ bonuses, scrap a planned increase in corporation tax and cut National Insurance. Kwarteng is also expected to cost moves by the government to cap household energy bills at £2,500 from 1 October.

A sample of 2,000 adults aged 16 and older were surveyed by GfK between 1 and 14 September.