UK consumer confidence takes a six-point dip as reality starts to bite

The overall index score for consumer confidence fell by six points to -30 in July, according to the latest GfK Consumer Confidence Index.

All five indexes measuring consumer confidence were down after showing steady signs of recovery for the first six months of the year despite ”the headwinds of the cost-of-living crisis”.

The index measuring consumers’ confidence in their personal financial situation over the past 12 months dipped five points to -20 and decreased six points to -7 over the next 12 months.

Consumer confidence in the general economic situation over the past 12 months fell four points to -58 and dropped eight points to -33 when looking at their confidence over the next 12 months.

The Major Purchase Index also saw a fall of seven points to -32, while the Savings Index increased one point to 26 – 13 points higher than this time last year.

GfK client strategy director Joe Staton GfK, said: “For the first six months of 2023, UK consumer confidence improved despite the headwinds of the cost-of-living crisis, with double-digit inflation outpacing income growth and rising interest rates impacting both homeowners and renters alike. Suddenly, this resilience has collapsed, resulting in a six-point fall this month in the headline score.

“There are clear concerns for the coming year for our personal finances and for the wider UK economy, with these measures down six and eight points, respectively. The recent fall in headline inflation will do little to improve the financial mood; consumers need to see falling prices and interest rates before that happens.

“Reality has started to bite and, as people continue to struggle to make ends meet, consumers will pull back from spending, as is clear from the seven-point drop in this month’s measure of major purchase intentions. All in all, it’s bad news. People are feeling economic pain and this confidence deficit needs to be reversed before the gains this year are lost.”