Consumer confidence reached an all-time low in February, according to the latest research by Nationwide Building Society.
A ten-point drop month-on-month to 38 means the consumer sentiment is at is lowest level since Nationwide began publishing a UK satisfaction index in May 2004.
Consumer’s growing reluctance to making purchases pushed the Spending Index down to 52 points in February as well, perhaps indicating why numerous UK retail sales showed that the industry struggled throughout the month.
The British Retail Consortium (BRC)-KPMG Retail Sales Monitor, for example, revealed that like-for-like retail sales dropped 0.4 per cent year-on-year in February, prompting the BRC to call for the government to increase its support for the industry.
Commenting on the Nationwide survey, the building society’s Chief Economist Robert Gardner said: “A fall in expectations towards the future was the main factor driving the index down, and consumers’ assessments of the present situation deteriorated slightly from already depressed levels.
“There are many factors that may be holding back confidence at the moment. The labour market remains fragile, with the unemployment rate still high and wage growth weak.”
Indeed, the Office for National Statistics announced earlier this week that unemployment in the UK rose to a 17-year high during the three months to the end of January.
Since then the influential think-tank Organisation for Economic Co-operation and Development has reduced its forecast for UK economic growth in 2011 from 1.7 per cent to 1.5 per cent.
Gardner added: “Inflation is showing few signs of easing, and high fuel prices and the VAT increase have further eroded disposable incomes in recent months.
“More generally, the UK recovery remains sluggish and there was little positive news in February to give consumers a much needed boost.”