Consumer confidence crashed in January, when it plunged at a rate not seen since the recession of the early 1990s.
Confidence levels plummeted to the lowest point for 12 months as the VAT rise brought home to consumers the reality of Government austerity measures, the Gfk NOP Consumer Confidence Index showed.
The overall index now stands at -29 and fell eight points from December and 12 points year-on-year. Shopper attitudes towards making major purchases were worst hit – down 22 points since December to -29 – but all the measures gauged fell.
People’s confidence in the economic outlook over the next 12 months slid seven points month-on-month to -30 and confidence in personal finances dropped four points to -12.
Gfk NOP social research managing director Nick Moon labelled the eight-point month-on-month decline “astonishing” and said it would reignite talk of a double-dip recession.
He said: “In the 35 years since the index began, confidence has only slumped this much on six occasions, the last being in the midst of the 1992 recession.
“The VAT increase is the first of the Government’s austerity measures that has had a widespread impact on consumers and it seems to have hit people’s economic confidence hard.
“With inflation on the up and the full force of the cuts yet to hit, these figures could be the beginning of a very painful period.
“There is a chance that these figures represent a post-Christmas blip but even if there is a rally in February it is extremely unlikely that it will reverse the massive drop.”