According to the market research company GfK, the consumer confidence index dropped 1 point to minus 41 in June, reaching the lowest reading in the 48 years of the survey. The risk of recession is impacting the outlook for both their finances and general economic conditions. The figures show the damage that the fastest inflation rate since the 80s is having on the country.

"With prices rising faster than wages, and the prospect of strikes and spiralling inflation causing a summer of discontent, many will be surprised that the index has not dropped further", commented Joe Staton, Client Strategy Director at GfK. "The consumer mood is currently darker than in the early stages of the COVID pandemic, the result of the 2016 Brexit referendum, and even the shock of the 2008 global financial crisis, and now there’s talk of a looming recession”, he added.

The Bank of England is now predicting inflation to climb above 11%, more than five times its target, as more energy bill hikes kick in October. The demand for discretionary goods is expected to reduce, as essential costs continue to rise, in line with low levels of consumer confidence observed. "Britain faces a stark new economic reality and history shows that consumers will not hesitate to retrench and tighten their purse strings when the going gets tough", concluded Client Strategy Director at GfK.

Moreover, according to figures from the S&P Global/CIPS UK purchasing managers' survey, business sentiment also fell to its lowest level in two years due to the rise in the consumer price index, which, in May, reached a 30-year high of 9.1%.