The GFK consumer sentiment report for the UK continues to plunge and it is one of the clearest signs of trouble in the UK economy. The CBI survey on retailing earlier had signaled some weakness and expectations of a softer January to boot. But actual sales data (released today) showed a gain in November although food accounted for all the volume increase. While the Bank of England struggles with policy, consumers seem to have made up their minds about where the balance of risk lies.

At a reading of -14 the GFK index is at its weakest point in over 10 Years. Still, households rate their financial situation as the best in 10 years currently. In this environment their plans for making major purchases are the lowest they have been in 10 Years. Consumers rate the general economic situation in the past 12-months as the worst in the past two years and in the bottom four percent over ten years. They assess inflation as the worst in 10 years.

While BOE is concerned about inflation too, a recent wage survey finds that wages deals have been contained in their recent range and in fact are not accelerating. Of course while that may be good news to the BOE, it is another factor pressuring consumers as energy prices rise.

The outlook for the next 12-months score very weak readings for the household financial situation and the general economic situation both in the bottom 15 percentile of their respective ranges for two years and about the bottom quarter of the range over 10-years. The major purchases index is at the 50% mark for the next 12 months compared to the past two years’ range, but that is a bottom 25% reading over the past 10 years. Obviously the consumer sector has been weak and is weakening again. Stratified by income, both high and low income respondents see conditions as among their poorest in 10 years.