Consumer confidence has fallen sharply ahead of the crucial Christmas trading period, experts have warned today.
According to a poll by analysts firm Conlumino, 46 per cent of consumers expect the UK economy to worsen in the next six months with only nine per cent predicting an improvement.
As such, the net confidence score fell to -36.9 last month, down from 20.9 per cent a month previously despite news that Britain has officially overcome the recession over the last quarter.
In terms of personal finances, 38 per cent households anticipate a deterioration of their own financial situation in the coming six months, while 52 per cent expect it to remain the same and just 10 per cent expect an improvement.
Some 60 per cent of shoppers intend to reduce retail spend over the next six months and of these, 16 per cent are planning ”severe” cutbacks while just three per cent plan to spend more over the period.
Commenting on the findings, Conlumino‘s Managing Director Neil Saunders said:“The fall in consumer confidence shows that while the country may be out of recession consumers remain fairly cautious and concerned over the state of the economy.
“This is filtering through into views on their own future personal circumstances and their retail spending plans.
“Entering the crucial Christmas trading period on this relatively sour note is not great news.
“However, Christmas won‘t be cancelled, it will just be a more muted affair where consumers are more careful with their spending.”
The one area where struggling consumers are set to increase spend is on food, Conlumino found as a separate poll discovered that 64.6 per cent of shoppers agreed that food this Christmas is more expensive than last.
This comes despite ongoing price wars by leading supermarkets which have led watchdog the Office of Fair Trading to work with top grocers to ensure the fair pricing of products to reduce consumer confusion.
Nonetheless, 78.5 per cent of consumers told Conlumino that they believe Christmas is now “far too commercial” and Matt Piner, Lead Consultant at Conlumino, explained that while people want to spoil friends and family, spemnd is likely to be significant lower than last year.
“Gifts and fripperies will be particularly hit, as consumers prioritise turkeys over tat,” Piner said.
“Rising food prices mean these bills now account for a considerable chunk of people‘s budgets, leaving less money for other things.
“The good news is there will be retail growth this year; the bad news is it will be minimal.
“Although employment and disposable income have stabilised recently, we‘ve had five years of tough conditions now and yet there‘s still a very real sense of more tough times ahead.”