Consumer confidence plummeted in September by nine points and is now at its lowest level for over a year.
The Nationwide’s Consumer Confidence Index fell to 53 for September, down nine points from August. The drop comes ahead of next week’s government spending review, which is expected to see wide-ranging job cuts in the public sector.
The index is now only nine points off the low of 44 in January 2009 – the month that the UK economy officially entered a recession.
The Spending Index dropped by 14 points to 85, the lowest level this measure has reached since November 2008, and below the long-running average figure of 92. The Expectations index was down by 12 points to 73, having increased during August.
Martin Gahbauer, Nationwide’s chief economist, said: “Confidence in spending took a knock during September, which may be a cause for concern among retailers as we enter into the run up to Christmas. Recent figures from the high street showed retail sales falling during August, and it could be that consumers are now beginning to feel the pinch on their spending power, which has up to now remained resilient despite difficult economic conditions.”
He said that it was likely that shopping for larger items, such as houses and cars, had particularly suffered from a decrease in sentiment, and that consumers were likely waiting to see what happened with the spending review and Christmas expenses before committing to major purchases.
The Nationwide’s survey is published a day after the BRC-KPMG Retail Sales Monitor show that like-for-like sales for UK retailers grew by just 0.5% over September.