British consumer confidence took a significant hit in October, plummeting to a three-month low of -30, according to the GfK consumer confidence index.
This sharp decline followed a brief uptick in September when confidence reached its highest level since the beginning of 2022.
The unexpected drop reflects growing concerns among households regarding their personal finances and the overall economic outlook.
Economists, who had anticipated a modest improvement to -20, were taken aback by the nine-point decline, the most substantial drop since a one-off survey conducted by GfK at the onset of the COVID-19 pandemic in 2020.
In fact, the last time a regular monthly release of the survey displayed a larger decline was back in December 1994.
Joe Staton, the client strategy director at GfK, emphasized, “This sharp fall underlines that the cost-of-living crisis, and simply not having enough money to make ends meet, are still exerting acute pressure for many consumers.”
British consumer price inflation remained at a staggering 6.7% in September, the highest rate among major advanced economies.
Though it has eased from the 41-year high of 11.1% recorded in October 2022, the average cost of living remains approximately 17% higher than it was just two years ago.
Staton went on to highlight the multiple challenges facing households, including the rising costs of heating homes, fueling vehicles, surging mortgage and rental rates, a slowing job market, and geopolitical uncertainties, such as conflicts in the Middle East.
All these factors contribute to the growing unease among consumers.
One particularly worrisome aspect of the report is the sharp decline in households’ willingness to make major purchases.
This decline could be a cause for concern for retailers, especially as it comes just before the crucial Christmas shopping season.
However, it’s worth noting that the index level remains above where it stood in October 2022.
The GfK survey, which involved polling 2,000 individuals aged 16 and over, took place between October 2 and October 13.
With consumer confidence at a three-month low and numerous economic challenges ahead, both consumers and businesses will be closely watching for signs of improvement in the coming months.