Asda warns over consumer confidence

Asda has warned that consumer confidence has deteriorated since the start of this year and is poised to worsen as austerity measures kick in.

Andy Clarke, chief executive of the supermarket chain, said consumers faced a “perfect storm” – with less money in their pockets and anxieties about higher food and fuel costs and public sector job cuts.

“I can only assume that consumer confidence will become more challenging,” he said, adding that rising interest rates would “put more pressure on families”.

Asda said that families were £9 a week worse off in January, compared with a year earlier, following a year-on-year decline in available funds for households after paying their tax and buying essential items in January 2010.

Mr Clarke said he had “personally handed” data from Asda’s income tracker to several front bench government ministers.

Rob McWilliam, commercial finance director, said there was evidence of “a bit of a mindset change”.

“Pre-Christmas, for most people, they were thinking there was a possibility that they may fall on hard times in the new year, but they would probably be OK. The mindset shifted into 2011, as what was once deemed possible is now deemed in many consumers’ minds as probable, and that is starting to affect their behaviour.”

Source : Andrea Felsted - FT.com