Consumer confidence dips ahead of Labour's first Budget as concerns over tax rises grow

"As the Budget statement looms, consumers are in a despondent mood despite a fall in the headline rate of inflation," said Neil Bellamy, GfK's consumer insights director. The Labour government's anticipated tax increases and overall fiscal tightening seem to have overshadowed recent improvements in inflation and GDP growth forecasts.

The general economic situation index, which measures confidence in the economy over the past year, fell by one point to -28. This decline reflects consumer unease about the country's economic performance despite encouraging signals, such as the International Monetary Fund's upward revision of UK GDP growth from 0.7% to 1.1% for the year.

The index slipped by one point to -21, marking its lowest reading since March and underscoring the challenges the Labour government faces in bolstering economic optimism since coming to power in July.

Consumers are cautiously optimistic about future purchases, as reflected in GfK's major purchase index, which increased by two points to -21, even amidst financial concerns.

Read at Business Matters