Consumer confidence 'stable' despite economic concerns, says GfK

Shopper sentiment dropped one point to -7 this month, according to GfK’s Consumer Confidence Index.

However, rival data from YouGov/Cebr revealed that confidence had slumped to its lowest level since July 2016 – the month after the EU referendum – declining 1.5 points to 108.

But YouGov/Cebr acknowledged that a score over 100 suggests that consumers are “more confident than unconfident.”

Despite overall confidence levels remaining relatively flat compared to the previous few months, four of the five measures used by GfK to quantify confidence dipped during April.

The major purchase index, which measures consumers’ willingness to buy big-ticket items like electrical appliances and furniture, edged up one point to +7 compared to March.

That also represented a two-point increase year-on-year.

Economic fears

Consumer optimism about the UK’s general economic situation over the past 12 months was the measure to suffer the steepest month-on-month decline, falling two points to -23.

That also marked a steep nine-point slump compared to April last year.

Respondents were slightly more confident about the UK’s economy over the coming year, although that measure still dropped one point month-on-month to -21.

A year ago, consumer confidence regarding the UK’s economic situation stood at -14.

Consumers were more optimistic about their personal finances, with confidence regarding their bank balances over the past 12 months dipping one point from March to +1.

That represented a slight decrease from +3 in April 2016.

Personal finances

Consumer confidence over their personal financial situation over the coming year also fell one point to +2, down from +7 12 months ago.

GfK head of market dynamics Joe Staton said: “In the face of widespread reports of rampant inflation, stagnating wages and anxiety over our borrowing binge, UK consumer confidence is surprisingly stable.”

Despite recording little evidence of an anticipated downturn following the triggering of Article 50, Staton warned this could be “the calm before the storm.”

He said: “Consumers continue to remain positive about the state of their personal finances and even report that now is a good time to buy.

“But is this too good to be true? Is this simply the calm before the storm? Is pre-Brexit economic turbulence yet to really batter households?

“That threat cannot be ruled out. But for the moment, consumer sentiment remains relatively buoyant as we enter our two-year window of renegotiation and navigate the run-up to the general election.”

YouGov data

YouGov/Cebr said six of the eight barometers it uses to measure confidence decreased in April.

Home owners’ expectations for property prices over the coming year and business activity in the workplace over the last month were the only areas to report increases. 

By contrast, the most notable fall in confidence came with regards to households’ financial situation over the coming year, with optimism slipping to its lowest level since December 2013.

Head of YouGov Reports Stephen Harmston, said: “Many analysts have said for a while that inflation would bite and these figures show that it has started to – and is likely to get worse over the coming year.

“But people are not just worried about their wallets – job security is weakening as well, and both of these things will shape how consumers act.”