UK consumer confidence has suffered its sharpest monthly decline since the Covid-19 pandemic, as renewed cost-of-living pressures put further strain on household budgets.

The GfK Consumer Confidence Index fell 11 points in October to -24, marking its biggest drop since March 2020. Excluding the pandemic, the decline was the steepest since the aftermath of the 2016 Brexit vote.

All five measures tracked by the index fell during the month, including consumers’ assessment of their personal finances and expectations for the year ahead.

The findings come as food retailers head into the crucial Christmas trading period, with shoppers facing higher household costs and increased uncertainty over their finances.

Supermarkets and convenience retailers will be concerned that weaker confidence could translate into greater demand for value, as households reassess their spending and prioritise essential purchases.

The latest figures also show that shoppers’ appetite for major purchases has weakened, with the relevant GfK measure falling 14 points. Expectations for the wider economy over the next year also dropped sharply.

The pressure on household finances is being compounded by higher fuel costs. Retail sales data published alongside the confidence figures showed supermarket sales volumes fell 0.4 per cent in September, while automotive fuel sales increased 2.2 per cent as motorists responded to rising pump prices.

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Food retailers have nevertheless shown some resilience this year. Tesco and Sainsbury’s have both recently upgraded their profit guidance, highlighting continued demand despite challenging conditions.

However, the latest confidence figures suggest supermarkets may face a more cautious consumer over the months ahead.

GfK consumer insights director Neil Bellamy said the results were a “sharp reminder” of how quickly consumer sentiment can change, with the summer’s stronger mood having evaporated.

With the Budget due next week, retailers will be watching closely for any measures that could ease pressure on household finances – and ultimately give consumers greater confidence going into Christmas.