The drop in consumer confidence from 103.0 to 98.8 represents the largest decline in over two years, according to the index.

Confidence decreased across all metrics captured by the index, with the measure tracking the outlook for household financial situations dropping by 10 points from 51.8 to 41.8 between July and August – the lowest recorded by the study.

The measure tracking household finances for the past 30 days fell by 3.1 points from 60.3 to 57.2, while the outlook for house prices dropped by 7.2 points from 132.1 to 124.9 in August.

Perceptions of job security also worsened, with the measure decreasing both for the past 30 days (from 93.7 to 91.9 ) and looking ahead at the next 12 months (from 120.9 to 118.5 )

Kay Neufeld, head of forecasting at Cebr, said: “Following a short-lived improvement in July, the 4.2-point fall in the Consumer Confidence Index in August represents the steepest decline since the early days of the Covid-19 pandemic and drags the headline index into overall pessimistic territory.

“The index was led lower by cratering sentiment regarding future household finances, as warnings about the upcoming increase to the energy price cap reached a climax in August.”

The analysis, carried out monthly, is based on YouGov data collected from 6,000 consumer confidence interviews. The most recent fieldwork took place between 1^st-31^st August, before the appointment of Liz Truss as prime minister. Participants answer questions about household finances, property prices, job security, and business activity, over the past 30 days and looking ahead to the next 12 months.  

Emma McInnes, global head of financial services at YouGov, said: “This latest dip in Consumer Confidence exemplifies a longer trend of sustained decline. In spite of July’s small uptick, this data from August sees our index score entering negative territory for the first time since the early days of the pandemic in June 2020.

“Despite the fieldwork for this study taking place before Liz Truss took up office and announced her plan to freeze energy bills for the average household, it’s clear that the new prime minister is facing an uncommonly dour public mood, particularly in terms of personal finance.”