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Financial confidence slumps to eight-year low

Households’ confidence in their financial outlook has slumped to its lowest level in more than eight years, research published on Wednesday showed.
According to polling firm YouGov and consultancy Centre for Business and Economic Research, households’ expectations for their financial situation in 12-months’ time fell 4.5 points in January to 79.1, the lowest since October 2013.

The wider measure of consumer confidence also fell, to 109.0 from 110.0, the weakest since March 2021.

Sam Miley, senior economist at Cebr, said: “This month’s drop in the consumer confidence index highlights the impact of the rising cost of living on household sentiment.

“Consumers’ assessment of their finances over the coming year provides for a particularly stark reading. Rising inflation and the planned uplift to National Insurance contributions are just two likely factors behind this weaker outlook.”

Consumer price inflation is at a near 30-year high of 5.4%, and the Bank of England has warned it is likely to top 7% before it will start to fall back. Interest rates have risen twice since December in response.

Meanwhile, energy bills are set to surge after energy regulator Ofgem last week upped the price cap in the face of soaring wholesale gas prices, while NI contributions will rise by 1.25 percentage points from April.

House prices continue to grow, however, helped in part by a shift in property requirements caused by the pandemic and government support for the sector. The YouGov-Cebr house value index for the past 30 days rose 1.8 points to 129.1, the highest since September 2014.

Darren Yaxley, head of reputation research at YouGov, said: “While consumers’ outlook for their household finances has not been as bleak since the autumn of 2013, homeowners’ view of property market has not been this strong since September 2014. Both are likely to be shaped over the coming months by announcements that took place at the start of February, after this data was collected: the energy price cap [announcement] and the bank of England rising interest rates.”

The YouGov/Cebr report surveyed a total of 6,000 people during January.

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