British consumers’ propensity to make major purchases has increased by seven points this December to +12, according to GfK’s latest index. This is five points higher than the same time last year and 14 points higher than July 2016, when major purchases fell to -2.
The core consumer confidence index has also increased by one point this December to -7. Although this is far behind December 2015’s positive score of 2.5, it represents an improvement on July’s post-Brexit score of -12, which was the biggest consumer confidence drop in 26 years.
The index measuring changes in personal financial situations has dropped one point to 0 this month and the general economic situation has dropped one point to -23, a staggering 17 points lower than December 2015.
Consumers are gung-ho when it comes to spending intentions and that’s despite their view that the general economy is drifting lower and lower.
Joe Staton, GfK
However, despite the economic situation and uncertainty over Brexit, shoppers have not been put off spending this Christmas given the savings index has also improved this month, increasing 6 points to -5. The index shows shoppers are keen to make major purchases now, anticipating higher retail prices in 2017.
Consumers are also more confident forecasting their personal finances over the next 12 months, with figures increasing one point to +3.
“Consumers are gung-ho when it comes to spending intentions and that’s despite their view that the general economy is drifting lower and lower. While the view on personal finance is below last year, it is still holding water. That contrasts with our perception of the economy, which has fallen off the cliff; the ‘economy’ scores we are closing the year with really are low,” Joe Staton, head of market dynamics at GfK, tells Marketing Week.
The volatile results come down to British consumers shopping more this Christmas, despite the potential price rises and economic instability predicted for 2017.
“Coinciding with this seasonal spending binge, I think consumers have made up their minds to avoid any anticipated price hikes by having lots of Christmassy shopping fun right now as concern grows about not being able to afford the things they want tomorrow,” Staton adds.
He warns that 2017 could easily be more turbulent than 2016, with Article 50 set to be triggered, inflation issues following the weakness of sterling, the possibility of the Bank of England changing interest rates and the aftermath of the US Presidential appointment.
“Triggering Article 50 won’t make the issue go away. It will simply open a new chapter as consumers gain an initial sense of how abrasive Brexit negotiations will be. The message for anybody in the marketing world next year is surely: ‘hold on to your hat’,“ Staton says.