In a surprising turn of events, British consumer confidence has once again demonstrated an upward trend in June, as reported by the longstanding Consumer Confidence Index from GfK. The Index experienced a three-point increase, reaching -24, marking the fifth consecutive monthly rise. Although the reading still remains negative, it is significantly higher compared to the same period last year.
GfK attributes this boost in consumer confidence to a growing optimism regarding personal finances in the upcoming year, despite the persistent challenges of stubborn inflation and a cost-of-living crisis. Taking a closer look at the index indicators, three measures showed improvement, one decreased slightly, and one remained unchanged in comparison to the previous month.
The measure reflecting changes in personal finances over the past 12 months ascended by five points, reaching -15, which is eight points higher than June 2022. Similarly, the forecast for personal finances over the next 12 months witnessed a seven-point increase, nearly reaching a positive reading of -1. This represents a significant surge of 27 points from the previous year.
The index measuring the general economic situation of the country over the past 12 months stayed the same at -54, but it experienced an improvement of 11 points when compared to June 2022. Expectations for the general economic situation over the next 12 months also saw a rise of five points, reaching -25, indicating a notable increase of 32 points compared to last year.
However, the major purchase index witnessed a slight decline of one point, settling at -25, although it still remains 10 points higher than the same period last year. Conversely, the savings index rose by six points, reaching +25, thereby reflecting a 16-point increase from the previous year.
Joe Staton, Client Strategy Director at GfK, highlighted the resilience of consumers amidst the challenging economic conditions, which include the cost-of-living crisis, escalating grocery prices, and the impact of mortgages on homeowners and renters. Staton emphasized the significant increase in optimism about personal financial situations in the coming year.
According to Staton, consumers’ ability to weather the current economic storm bodes well for future growth. The Overall Index Score for June stands as the highest in the past 17 months, serving as an indicator of a solid foundation for recovery.
Despite the persistent hurdles posed by inflation and the cost of living, British consumers maintain a hopeful outlook for their personal finances. This resilience could potentially provide the necessary stability for the UK economy to regain momentum and return to a path of growth.
Useful links:
1. GfK Consumer Panel
2. GfK Consumer Confidence Survey
