onsumer confidence has suffered a sudden collapse as “reality bites” amid relentless inflation and rising rates of interest, based on a long-running survey.

GfK’s Consumer Confidence Index plunged six factors in July to minus 30, with issues for private funds and the broader UK financial system over the approaching yr down six and eight factors respectively.

However the forecast for private funds over the subsequent 12 months continues to be 19 factors greater than this time final yr, whereas expectations for the final financial system remai 24 factors higher than final July.

The main buy index, an indicator of confidence in shopping for massive ticket gadgets, is down seven factors to minus 32 as customers pulled again from spending to make ends meet.

GfK shopper technique director Joe Staton stated: “For the first six months of 2023, UK consumer confidence improved despite the headwinds of the cost-of-living crisis, with double-digit inflation outpacing income growth and rising interest rates impacting both homeowners and renters alike.

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“Suddenly, this resilience has collapsed, resulting in a six-point fall this month in the headline score.

“The recent fall in headline inflation will do little to improve the financial mood; consumers need to see falling prices and interest rates before that happens.

“All in all it’s bad news. People are feeling economic pain and this confidence deficit needs to be reversed before the gains this year are lost.”

Linda Ellett, UK head of retail and leisure shopper markets at KPMG, stated: “Over half of consumers that KPMG recently surveyed say they have reduced their non-essential spending so far this year.

“A quarter feel more secure than they did when 2023 began. But a third feel less secure.

“Whilst every household has been impacted by higher costs this year, the divergence in consumer confidence continues to be governed by current or near-future exposure to significant major cost increases.

“Despite efforts of householders to reduce costs where they can, for some those efforts are simply dwarfed by the sizeable jumps in mortgage or rent they are facing.”