UK consumers facing up to 'new abnormal' as confidence remains bruised
It’s described as “meagre”, but at least it’s a gain. That’s the UK’s already-battered consumer confidence index rating, which actually rose two points in October, according to consumer data company GfK.
But let’s not get carried away. The key reading is still languishing at an almost-all-time-low reading of -47, according to GfK, whose bleak report on Friday said UK consumers are “grappling with a ‘new abnormal’ amid uncertainty and turmoil”.
Its closely-watched index for this month did show that three measures were up, one was flat and one dipped in comparison to September’s announcement, but the overall report was littered with minus readings.
The index measuring changes personal finances over the last 12 months was the same -28 reading compared to September and remained 23 points worse than October 2021.
The forecast for personal finances over the next 12 months increased six points to -34 and remained 35 points lower than this time last year.
The measure for the general economic situation of the country during the last 12 months was up three points at -69, but remained 23 points lower than last October. Meanwhile, expectations for the coming 12 months actually improved seven points to -61, but were still 35 points lower than 12 months ago.
Importantly, the major purchase index fell three points to -41, some 31 points lower than this month last year.
And the savings index, which tends to rise in troubled times, was up two points this month at +13, but remained nine points lower than this time last year.
Joe Staton, Client Strategy Director at GfK, said: “UK consumer confidence continued to bump along close to last month’s historic low. However, all core measures remain severely depressed. The three-point fall in the major purchase measure continues a steep downward trend that began in July 2021 and is especially worrying for the final quarter of the year, which many businesses rely on to strengthen their balance sheets."
Worryingly, he added: “The biggest danger by far is inflation, now rising at its fastest rate for 40 years. Households are not just running scared of burgeoning energy and food prices, and the prospect of further base rate rises increasing mortgage costs. They are now facing the likelihood of tax rises and even austerity measures. For ordinary consumers, this web of uncertainty and turmoil amounts to a ‘new abnormal’. The negative environment will deflate future spending plans, and cautious consumers could easily slow the UK economy still further. Consumers, like governments, are just as capable of U-turns, and today’s economic headwinds indicate a long hard winter.”
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