The major purchase index, which calculates the likelihood of consumer propensity to spend big on products such as electronic equipment or furniture, fell four points this month to +12. Joe Staton, head of market dynamics at GfK, says that although it is eight points higher than February 2015, it could point to the start of a long-term dip.
He told Marketing Week: “The intention to spend on ‘major purchases’ has dipped but people are not thinking about saving their money as an alternative – the Savings Index has slid backwards by a sizeable amount too.
“I said in January that February’s barometer would make for interesting reading but it’s difficult to second guess March. Are we at the start of a longer dip downwards? Or are we in a gloomy Brexit holding pattern perhaps with the next chapter hidden from view until the result of the June referendum is known?”
Doom and gloom returns
Four of the five measures used to calculate the Index saw declines this month, with only one recording a rise.
British consumer’s perception of their own personal finances over the next 12 months fell one point to +8. However, there were steeper falls in terms of their outlook to the wider economy.
There is still an air of uncertainty around the general economic situation of the UK – expectations for the next 12 months have fallen seven points to -7, this is four points lower than this time last year. The score for how consumers have viewed the British economy over the last 12 months, meanwhile, fell 7 points to -10 this month.
The index measuring changes in personal finances over the last 12 months increased by one point this month to +5; this is eight points higher than February 2015 and the only metric to show a gain.
Staton says the negative outlook on the British economy signifies the end of ‘New Year optimism’.
He added: “While faith in our own personal financial situation continues to remain strong for the year ahead with just a one-point drop to +8 points, we are clearly worried about the general economic situation for the country.
“Here, there have been sharp drops both for the view over the past year and the coming year. So, despite the positive impact of continued low interest rates and subdued inflation on our day-to-day household budgets, the feeble outlook for growth and a variety of economic uncertainties since the start of the year has depressed our New Year optimism.”