According to data company GfK, UK consumer confidence has experienced a significant decline in October. After a relatively positive summer, the latest confidence reading saw a nine-point drop, reaching a low level of -30. This decrease is further worsened by a 14-point decrease in the Major Purchase Index, indicating a lack of consumer spending leading up to the festive season.
All five index readings for this month have shown a decrease compared to the previous month. Joe Staton, the client strategy director at GfK, highlights that the sharp fall in consumer confidence “underscores the ongoing cost-of-living crisis and the financial struggles faced by many consumers.”
The index also reveals a six-point decrease in the measure for personal financial situations, reaching -19, which is still an improvement compared to October 2022. Additionally, the forecast for personal finances over the next 12 months dropped six points to -8, but remains 26 points higher than the same period last year.
Regarding the country’s economic situation, the measure for the general economic situation in the past 12 months is down seven points at -54, which is 15 points higher than October 2022. Expectations for the general economic situation over the next 12 months also fell eight points to -32, indicating a 29-point improvement compared to the previous year.
The Savings Index has also seen a decrease of two points, currently standing at +25, which is still 12 points higher than this time last year. Staton attributes this decline in confidence to various factors, such as increasing costs of heating homes, rising petrol prices, surging mortgage and rental rates, a slowing job market, and the uncertainties posed by conflict in the Middle East.
Overall, the consumer confidence in the UK is displaying volatility and reflecting a widespread economic pessimism. There doesn’t seem to be an immediate prospect of improvement in the near future.
Useful links:
1. BBC: UK consumer confidence falls again in October
2. The Guardian: UK consumer confidence falls sharply as festive season looms
