By Max Clarke

Consumer confidence has dipped again, returning to the lows seen earlier in the year, the latest figures from GfK NOK indicate.

Much of the long-term drop in consumer confidence is the result of soaring commodity prices and squeezed income growth.

A 20% drop in the value of sterling since its pre-recession peak, coupled with price rises in oil and food on the global market has made the cost of importing to the UK skyrocket. The result has been retail price inflation along with spikes in utilities bills, which have drastically eroded the disposable income of UK households.

"Consumer confidence has shown the second major fall in a row, returning to the depths of the first quarter of this year. It’s becoming clear that May’s positive surge was the exception rather than the norm, as we return to -30 — wiping out almost all of May’s rise. Before this year, the index has only twice been lower in its 37-year history: during the recessions of early 1990 and mid-2008.

"All five elements of the index have fallen this month. What will concern the Government most is that the biggest drop of 9 points was in people’s expectations of the performance of the economy over the next 12 months. When combined with people’s pessimistic expectations for their own finances over the next year, retailers can expect tough conditions to persist for a while yet — threatening an already fragile recovery."

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