Consumer Confidence Hits Three-Year Low Amid Cost of Living and Interest Rate Fears

Consumer confidence has fallen to its lowest point in over three years, according to the latest figures from S&P Global. The consumer sentiment index registered 41.3 in October, a decrease from 42.7 in September and the lowest reading since July 2023.

Experts at S&P Global attribute the decline to persistent cost-of-living pressures and concerns over potential interest rate hikes. The ongoing global events, particularly in the Middle East, have amplified economic anxieties, casting a shadow over households' financial outlook.

Mariam Baluch, an economist at S&P Global Market Intelligence, noted that any initial positive response to economic stimuli has been short-lived. "Any 'Burnham bounce' has proved short-lived, eclipsed by the impact on the cost of living from events in the Middle East and the accompanying prospect of higher interest rates," Baluch stated.

The data indicates a growing belief among consumers that borrowing costs are likely to increase soon, as the Bank of England works to control inflation. "October has brought a growing conviction among households that borrowing costs will rise imminently as the Bank of England seeks to tame inflation," Baluch added.

For economic growth to strengthen, Baluch emphasized the need for households to feel more optimistic about their financial futures and job security. "Households will need to start feeling brighter about their financial prospects and job security than we're seeing in the lead up to the Budget if hopes of stronger growth… are to become anything more than wishful thinking," she concluded.