Consumer confidence was at the lowest level since records began last month, new figures from Nationwide have revealed.
Confidence fell by seven points during April, 22% lower than at the same time last year and the lowest since the Nationwide Consumer Confidence Index began in May 2004.
Just 17% of consumers said they believe the economic situation is ‘good’ – less than half the number who had the same expectations before the Northern Rock crisis.
Over a third said they believe the economy is ‘in bad shape’ – a similar proportion to those who thought it was in good shape before the credit crunch hit, the building society said.
One in six respondents said now is a bad time to make a major purchase such as a car or a house, compared to around half six months ago.
The bank said the biggest factor behind the drop is consumers’ plummeting outlook for economic and employment situations, as well as low expectations for their income levels in six months’ time.
Fionnuala Earley, chief economist at Nationwide, said April’s cut in interest rates had done little to lift consumer spirits.
“Food and fuel prices remain high and, with house prices no longer rising, it is unlikely consumer confidence will pick up very quickly,” she said. “We may have to accept that confidence levels could well get worse before they get better.
“This is especially true as inflationary pressures mean the Monetary Policy Committee will probably prefer to cut rates at a more gradual pace than many would prefer,” she said.
© Crimson Business Ltd. 2008
