Nationwide's consumer confidence fell for the third consecutive month today as the building society announced it now stands at similar levels to a year ago amidst the height of the recession.

Although confidence has improved since then, the stark fall since December last year reflects growing worry over a tightening of disposable income.

Yesterday the Government announced a crackdown on benefit thieves and today the latest jobs figures announced only a small fall in those claiming Jobseeker's allowance. The two measures suggest job prospects and income are both likely to fall over the next months:

"This might be a sign that the slowdown in the wider economic recovery is already spreading to the labour market." said Vicky Redwood at Capital Economics.

"Consumers continued to show caution towards the strength of the economic recovery during July. The index has now seen three consecutive months of decline and this has largely been fuelled by uncertainty as to what the next six months hold. In particular, there appears to be a growing concern among consumers as to their level of disposable income in the months ahead. July will have been a time for many consumers to reassess their individual circumstances following the Chancellor's emergency Budget, and inflationary pressures, such as rising food and fuel costs, may now be leading to more negative sentiment among consumers as they start to feel the pinch on their spending power." said Martin Gahbauer, Nationwide's chief economist.