Consumer confidence lifts at end of rollercoaster year

GfK head of market dynamics Joe Staton described 2016 as a “turbulent year for confidence” as consumers reacted to “dramatic economic and political turmoil”.

During the build-up to the EU referendum, overall sentiment plummeted eight points to -9, and fell again to -12 after the vote.

It has since undulated between -1 and -8.

Staton said: “After a positive start to the year, the index plunged rapidly in post-Brexit Britain, with the recovery to September then evaporating by year end to limp home at -7 for December.

Two of the five sentiment measures increased in December and three decreased.

The biggest increase was in the ’major purchase index’, which measures consumer resilience and jumped seven points to 12 – five points higher than this time last year.

Staton said: “Despite everything, the ‘now is a good time to buy’ mantra being reflected in strong retail sales growth.”

He added that, while consumers remain relatively confident about their personal financial situation, confidence in the general economic situation for the UK has collapsed in the face of uncertainty about the future.

The the forecast for personal finances over the next 12 months increased by one point in December to 3. This is six points lower than December 2015.

However, expectations for the general economic situation over the next 12 months dropped one point to -23 this month – 17 points lower than this time last year.

The savings index increased six points to -5.

The year ahead

Looking ahead to 2017, Staton said: “Against a backdrop of Brexit negotiations, the decline in the value of sterling, and the prospect of higher inflation impacting purchasing power, we forecast that confidence will be tested by the Sturm und Drang of the year to come.”