UK consumers buckling under cost of living crisis

UK consumers are starting to crumple in the face of soaring prices, according a series of reports that paint a grim picture of the nation’s cost of living crisis.

The Office for National Statistics said Friday the volume of goods sold in stores and online fell 0.5% in May, as soaring food prices forced consumers to cut back on spending in supermarkets.That followed earlier figures showing higher prices are also weighing heavily on consumer confidence, pushing it to to a record low this month. The outlook for stores also looks bleak, with the Confederation of British Industry saying Thursday that retailers were also expecting a poor July.

Taken together, the reports show the deep damage that the fastest inflation rate since the 1980s is having on the economy. With wages failing to keep pace with rising prices, consumer finances are being squeezed. The outlook is more gloomy than during the depths of the coronavirus pandemic.

“We’re entering the real cost of living crisis,” said Emma-Lou Montgomery, associate director at Personal Investing, Fidelity International. “With prices for even the most basic foods and goods rising substantially many consumers are already adopting more defensive spending behaviors, such as self-imposed checkout limits.”The poor figures are bad news for Prime Minister Boris Johnson’s ruling Conservatives, which suffered two bruising defeats in key special elections on Thursday.

GfK said Friday its measure of consumer sentiment dropped 1 point to minus 41 in June, the lowest reading in the 48 years of the survey.

The risk of recession weighed on consumers’ view of the future outlook both for their own finances and the broader economy.

The survey is the first since the government announced a multi-billion pound package of support for households to help them cope with soaring energy bills. The findings suggest that unprecedented aid is not enough to bolster sentiment.“ Bloomberg.

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