For a second consecutive month the GfK consumer confidence barometer has set a record low, falling 41 per cent in June.
Hargreaves Lansdown has described it as a "horror" show for consumers and savers, while GfK’s client strategy director, Joe Staton, describing the consumer mood as "darker" than during the early Covid-19 lockdowns.
Staton said that given the current climate of price increases outpacing wage increases, the prospect of strikes and spiralling inflation many might be surprised the index has not dropped further, with Britain facing a “stark new economic reality”.
“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 said.
Four GfK measures were down in comparison to the May announcement, and one was flat.
The index measuring changes in personal finances over the last 12 months has decreased one point, down from -22 to -23. This is 23 points worse than the same period last year.
The forecast for personal finances over the next 12 months is also down three points, to -28.
The measure for the general economic situation of the country during the last 12 months was down two points at -65, 18 points lower than in June 2021.
Expectations for the general economic situation over the coming 12 months have dropped by one point to -57 or 55 points lower than last year.
The major purchase index stayed the same in June at -35, although this is 30 points lower than last year.
Meanwhile, the savings index is down one point this month at +9, 12 points lower than this time last year.
ONS retail sale figures for May have also shown that sales volumes dropped 0.5 per cent between April and May with food stores driving this drop, down 1.6 per cent on the previous month - 2.4 per cent below their pre-pandemic levels.
The amount we spend on food was up 5 per cent compared to the previous year and up 13 per cent from February 2020, before the pandemic.
Hargreaves Lansdown’s senior personal finance analyst, Sarah Coles described the situation as a “horror” with 44 per cent of people buying less food in an effort to keep costs contained, an 18 per cent increase on the beginning of the year.
“We’re still spending more. The amount we spent was up 0.6 per cent in a month and 5 per cent in a year. However, given that inflation over the period was 9.1 per cent, this is clear evidence that we’re cutting back.
“Over the coming months, we can expect to see more weakness spread throughout the sector.
"It’s not just the rising bills of today that are worrying us, it’s the prospect of even higher bills tomorrow, and fears of a looming recession, which might cause our finances to unravel entirely,” she said.