Consumer confidence flattens as threat of inflation curbs growth

Sentiment stayed flat at -9 throughout the month of June, with consumer fears about the wider economic outlook hampering what had been fairly consistent growth in confidence since March, according to the latest GfK Consumer Confidence Index.

While consumers remain concerned about the short-term prospect of the nation’s economy, they continue to feel confident about their personal finances. 

Consumers’ confidence about their personal financial situation over the last 12 months jumped four percentage points to 0, while confidence for the next 12 months jumped one percentage point to 11 – a full 15 points higher than this time last year. 

The major purchase index also jumped two points to -5 for the period – 27 points higher than for the same period last year. 

Concerns about the general economic situation over the next 12 months also fell six points to  -2, although GfK pointed out that this was still a full 46 points higher than June 2020. 

GfK client strategy director Joe Staton said: “While the shifting sands of an end to lockdown might be the closest most of us get to a summer beach holiday, consumer confidence remains stable at -9 after 16 months of a Covid-induced roller-coaster. A repetition of last month’s score doesn’t mean confidence is about to nose-dive. 

“The upwards trajectory for the index since the dark days at the start of the pandemic is currently still on track. However, forecasts for rising retail price inflation could weaken consumer confidence quickly and that may account for the six-point dip in June in our measure for the wider economy in the coming year. 

“On a more positive note, we have strong numbers for our personal financial situation, both for the past year and the year to come.

“In addition, this month’s further improvement in the major purchase index – the third month in a row – could see shoppers spending in anticipation of a staycation summer.”