Consumer confidence in the UK took a blow in September, signaling potential trouble ahead. Rising fuel and food prices, inflation, tax hikes, empty store shelves, and the end of the furlough scheme are some of the factors contributing to this decline. GfK’s Consumer Confidence Index, a reliable gauge of consumer sentiment, dropped five points to -13 this month.
It’s no surprise that all measures of consumer confidence were down compared to the previous month. However, when compared to September of last year, the figures were actually higher. This can be attributed to the uncertainties the UK faced at that time due to the pandemic.
This news is particularly worrisome for retailers as they brace themselves for the crucial festive shopping season. Consumer sentiment plays a crucial role in driving spending during this period, and a dip in confidence can have a negative impact on sales.
The index measuring changes in personal finances over the past year also suffered a decline of four points to -4. However, this still represents a three-point improvement compared to September 2020. The forecast for personal finances also dropped, with a reading of +5, which is four points higher than the same time last year.
Looking at the general economic situation of the country over the past year, the index dipped one point to -43. Nonetheless, it’s important to note that this is still 18 points higher than in September 2020. Expectations for the general economic situation in the next 12 months fell by 10 points to -16, but this is still 22 points higher compared to last year.
As for major purchases, the Major Purchase Index fell three points to -6 in September compared to August. Nevertheless, it remained 15 points higher than in the same month last year. Additionally, the Savings Index dropped three points to +22 in September, a mere two points higher than last year.
Joe Staton, Client Strategy Director at GfK, expressed his concerns about the situation, stating that “September sees consumers slamming on the brakes as those already in economic hardship anticipate a potential cost of living crisis.” He further explained that consumers are worried about their personal finances and the economic prospects for the upcoming year.
The decline in the major purchase index is particularly troubling for retailers who are already struggling and hoping for increased sales during the holiday season. When consumer confidence dwindles, spending tends to decline, negatively impacting the overall economy.
As we move into 2022 and beyond, this outlook is undoubtedly unwelcome. Retailers and policymakers must closely monitor consumer sentiment and make efforts to restore confidence in order to support economic recovery and growth.
Useful links:
1. BBC – Consumer Confidence Data
2. The Guardian – UK Consumer Confidence
