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Households ‘really do have the jitters now’ as price rises bite, according to new figures that show consumer confidence plunging.
A closely watched poll from market research firm GfK showed confidence ‘deteriorating sharply’ as the Iran war takes its toll on the cost of living.
The findings came as companies in Britain’s services sector reported the sharpest rise in cost inflation for decades, leading many of them to pass these on in the form of higher prices.
And a separate report from the Confederation of British Industry revealed that UK manufacturers are responding to the pressure by slashing jobs at the fastest rate since October 2020.
It comes days after official figures showed inflation climbed to 3.3 per cent last month owing to the conflict in the Middle East.
The war is choking off oil and gas supplies, which has already resulted in motor fuel prices soaring and will mean higher energy bills later this year.
Costs crunch: A closely-watched poll from market research firm GfK showed consumer confidence 'deteriorating sharply' as the Iran war takes its toll on the cost of living
And the price pressures mean Bank of England interest rate cuts are off the table, in a blow to millions of borrowers. Yesterday, markets were betting on two rate hikes by the end of the year.
GfK’s poll yesterday revealed that anxiety among households that was already starting to build last month has deepened further, with confidence falling to a score of minus-25.
Neil Bellamy, consumer insights director at the firm, said: ‘Consumers really do have the jitters now.
‘Everyone is grappling with rapid price rises, especially at the fuel pumps, which are taking a dent out of household budgets, and people know further price hikes are coming.’
Bellamy said savings were rising, which was ‘often an indication that people are concerned about what lies ahead’.
Meanwhile, a monthly Purchasing Managers’ Index survey showed deepening cost pressures for the services sector, which covers everything from law firms and accountants to pubs and hotels.
It found the acceleration in cost inflation this month was the greatest since the survey began in July 1996.
Overall, the private sector experienced an upturn in growth – partly thanks to purchases being brought forward ahead of price rises. But the poll from S&P Global painted a bleak picture looking ahead.
Chris Williamson, the chief business economist at S&P Global, said: ‘Business confidence and employment have also been dragged lower by the ongoing conflict, boding ill for growth to weaken in the coming months just as price pressures intensify.’
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