After a temporary rise in December the UK consumer confidence level fell back in January, according to new data.
Building society Nationwide’s Consumer Confidence Index dropped seven points to 47 in the month almost reversing the eight-point climb seen at the end of 2010.
Most startling perhaps is the 20-point fall in the Spending Index, a reflection on sentiment about household and major goods purchases, to its lowest level since November 2008.
Robert Gardner, Nationwide’s Chief Economist, said: “Household confidence remained in the doldrums in January, with the main index falling towards the all time lows recorded during the recession.
“This follows a small bounce in December and confirms that consumers are still feeling very subdued about their own personal circumstances.
“The fact that the index fell during the month is not surprising, when we consider the influences that will have impacted on consumer sentiment during the survey field dates.”
Confidence about the present situation fell two points in the month to 23 whilst the Expectations Index decreased from 73 points in December to 63 in January.
The Nationwide Consumer Confidence Index was started in May 2004 and all scores in subsequent reports are compared against an average score of 100 from that month.
According to the report, consumers’ attitudes towards the economy deteriorated in the month and fewer than one in five believe that things will improve over the next few months.
“In the quarters ahead, we expect business investment and trade to lead the recovery and this will gradually feed through to households through stronger employment and income growth,” Gardner continued.
“Nonetheless, it is likely to take time for the feel good factor to filter through and it may be some months before we see significant positive movements within the Consumer Confidence Index.”
With yesterday’s announcement that the Consumer Price Index has risen to four per cent and the national unemployment level revealed as increasing today, any improvement in confidence is highly unlikely to be seen in February.