Consumer confidence holds steady before General Election as consumers ‘shrug off’ uncertainty
But confidence is expected to fall into decline ‘sooner or later’ as consumers face up to pressure of inflation and poor wage growth.
Consumer confidence returned to growth in May, with the latest figures from GfK showing the overall confidence score at -5, a two-point rise from April.
In fact, four of the five confidence measures were up in May, which compared to four of the five being in slight decline in April.
Consumers’ perceptions of their own personal finances over the last 12 months as well as over the next 12 months rose by one and two points respectively.
The major purchase index, meanwhile, rose by two points to +9. This is the third month in a row it has risen, with uncertainty over the Brexit negotiations and who will be leading the country after 8 June yet to stop Brits spending money on big ticket items.
However, it is worth noting that the main confidence score hasn’t been in positive territory since January 2016. And even though consumers’ perceptions of the general economic situation over the last 12 months rose 3 points in May, its score of -20 is still deep into negative territory.
According to Joe Staton, head of market dynamics at GfK, consumers are currently shrugging off the UK’s economic uncertainty. However, he expects things to change over the coming months and their “fickleness” to soon show.
He tells Marketing Week: “We have a General Election next week and Brexit talks have yet to start in earnest. We also have high inflation accompanied by clear pressure on wages. So there’s no shortage of uncertainty in the air but consumers appear to be shrugging it off, for now.
“But if you stand back and look at the overall index score over a number of months and you’ll realise that the last time we had a positive score was in January 2016. So it’s a story this month of an interesting uptick against an underlying trend for nearly one-and-a-half years of negative confidence. Sooner or later consumers will feel the inflation and wage pressures.”
Staton believes something like an interest rate rise or complication within the Brexit negations will soon push consumers into a “more worrisome mood.” Watch this space.
