A slump in morale among Britain’s consumers to the lowest levels for nearly five years sparked renewed fears for retailers over sales prospects yesterday as the crucial Christmas trading periods gets into full swing.

The latest snapshot of consumer sentiment from GfK/NOP for the European Commission reported that already faltering confidence succumbed to a further steep decline last month.

The survey’s headline index of confidence tumbled to minus 10, from an October reading of minus 8 as Britons were gripped by gloom over present conditions and the outlook for both the economy and their own finances.

The latest slide in consumer morale comes after blows to the nation’s pockets from soaring costs for food, fuel and rising mortgage bills thanks to higher interest rates, and the expiry of cheap, fixed-rate loan deals. Worries for the retail industry over Christmas trading will be further fuelled as the survey’s findings also saw a continuing drop in people buying big-ticket white goods, electronics, and furnishings. GfK’s index of consumers’ willingness to make big spending commitments sank to its lowest since December 1995 and is down eight points on a year ago.

Retailers can take scant consolation from next week’s meeting of the Bank of England’s Monetary Policy Committee, with most of the City predicting that nervousness over inflation dangers will lead the MPC to keep interest rates on hold for another month.

Howard Archer, of Global Insight, an economic consultancy, said the high street faces a tough winter. “Low consumer confidence and an increasing reluctance to make major purchases do not bode well for consumer spending,” he said. “This is particularly worrying for retailers with the critical Christmas period starting. It does seem likely that consumption will be dampened over the coming months.”

GfK’s Rachael Joy said: “With petrol prices racing past £1 a litre, food prices increasing, and the prospect of higher mortgages and loan fees resulting from the credit crunch, even the most optimistic seem to view their glass as half-empty.”

As high street groups anxiously await preChristmas trading to see if consumers will go into a full-scale retreat, separate surveys of spending patterns backed CBI’s findings that demand has held up better than expected.

FootFall, a company monitoring shopper numbers, said November saw the largest month-on-month rise this year but levels were still down nearly 3 per cent on last year.

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