Consumer confidence hits record low

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Ongoing economic uncertainty, a weakening housing market and higher food and fuel costs all combined to make consumers feel increasingly negative, Nationwide said.

Its consumer confidence index dropped to just 61 during the month, down from 65 in May and 93 in June last year, to hit a new record low for the sixth consecutive month.

The fall was driven by fears that the economy will further deteriorate in the coming months, with 53% of people expecting the situation to get worse going forward - more than double the proportion of people who felt the same 12 months ago.

At the same time just 16% of people now think their household income will be higher in six months' time, down from 21% in May.

Consumers' confidence in the current economic situation remained static during the month, although it was already at a record low, with 52% of people saying they thought the current economic situation was bad.

But people were more upbeat about employment levels, with 50% thinking there are currently some or many jobs available, while 37% expect the situation to remain the same going forward.

Fionnuala Earley, Nationwide's chief economist, said: "This month's drop in confidence is to be expected given the recent run of bad news. With reports of rising inflation rates, weaker economic growth and further falls in house prices, it is not surprising that people are feeling much less optimistic about the future.

"While consumers appear to be fairly relaxed about the availability of jobs, with unemployment beginning to rise, we are likely to see a change in labour market sentiment over the coming months."

But despite the general economic gloom, the number of people who thought it was a good time to make a major purchase, such as a house or car, increased to 18% - the highest level since July last year.