Alarm bells ring as UK consumer confidence falls on cost of living concerns
UK consumer confidence took a knock in September and it’s easy to understand why. Add together concerns about rising prices for fuel and food, the growth in headline inflation, tax hikes, empty shelves and the end of the furlough scheme and it’s no wonder GfK’s long-running Consumer Confidence Index fell five points to -13 this month.
No surprises too that all its measures were down compared to the month-ago announcement, although year-ago comparisons were all up, unsurprising given the UK’s continuing concerns last September over which path the pandemic would take.
That’s all worrying for retailers as they gear up for the important festive shopping season.
Importantly, the index measuring changes in personal finances over the last 12 months dropped four points to -4, three points better than September 2020. And the forecast for personal finances fell to a reading of +5, four points higher than this time last year.
The measure for the general economic situation of the country during the last 12 months inched down one point at -43, again 18 points higher than last September. Expectations for the general economic situation over the coming 12 months have fallen by 10 points to -16; but this is still 22 points higher than September 2020.
As for the Major Purchase Index, this was down three points compared to August to -6 in September, although that was 15 points higher than it was this month last year.
Finally, the Savings Index was down three points to +22 in September; this is only two points higher than this time last year.
Joe Staton, Client Strategy Director GfK, said: “September sees consumers slamming on the brakes as those already in economic hardship anticipate a potential cost of living crisis. Consumers are clearly worrying about their personal financial situation and the wider economic prospects for the year ahead".
He added: “A fall in the major purchase index [is also] depressing news for hard-pressed retailers looking to build sales as they go into the key holiday period. When consumer confidence drops, shoppers tend to spend less, and this dampens the overall economic prospects for the UK. This really is an unwelcome picture going into 2022 and beyond”.
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