LONDON (Reuters) – Britons’ spending morale fell to a record low in August amid the highest rate of inflation in 40 years. The measure of consumer confidence fell three points to minus 44, GfK consumer researchers announced Friday in their monthly survey. This is the lowest level since at least 1974, when the UK Household Finance Survey began. Economists polled by Reuters had expected a weaker decline to minus 42 points.
Consumers surveyed rated their personal financial and general economic situation as worse. “All values are down, reflecting acute concerns about the rising cost of living,” said Joe Staton, an expert at GfK. “Desperation from the British economy is the main reason for these results.” Experts are particularly concerned that food prices are rising sharply in addition to energy. “Meeting their needs has become a nightmare,” said Staton, looking forward dimly. “The crisis of confidence will only get worse as the dark autumn days and the cold winter months come.”
UK inflation is now at its highest level in four decades, with the cost of goods and services increasing by 10.1 per cent in July from the previous year. The most powerful driver of prices is energy. But Britons also have to dig deeper into their pockets when it comes to shopping for everyday needs: retail prices are up 12.3 per cent, the highest since 1981. Economists predict that the inflation rate could rise to more than 13 per cent in the autumn, which It leads to prolonged stagnation.
This entails unusual measures: for example, the British supermarket chain Iceland Foods offers its customers interest-free loans for the purchase of groceries in view of extremely high inflation. The program targets poor families suffering from high cost of living. Iceland Foods, which has more than 900 stores, works with the nonprofit lending company Fair For You. Financially vulnerable customers will be given small loans of 25 to 100 pounds (30 to 119) via pre-installed cards, which can be repaid once a week.
UK consumer sentiment at record low – ‘a feeling of despair’
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