Consumer confidence beginning to resemble an ‘abandoned bowl of porridge’

“Cold, congealed and in want of a blast of heat”, consumer confidence continued to decline in October as Brexit anxieties linger.

In spite of the Government declaring an “end to austerity”, news of lower retail price inflation and accelerating wage growth, consumer confidence has decreased yet again this month.

GfK’s consumer confidence index dropped by one point in October to -10, with three of the five measures declining and the other two remaining the same.

Views on personal finance and the wider economy for the coming year dropped by one point a piece, while the numbers on purchase (-2) and saving intentions (-1) also took a knock.

Joe Staton, client strategy director at GfK, describes the current state of consumer confidence as beginning to resemble an abandoned bowl of porridge: “Cold, congealed and in want of a blast of heat, a little cream and sugar, plus a good old stir.”

He adds: “Brexit is making people worry and err on the side of caution. In October, we had encouraging news on retail price inflation and wages, and promises that austerity will soon end, but members of the public appear to be discounting these developments.

“There’s every likelihood the consumer mood will remain in the doldrums for some time.”

Perhaps this week’s budget announcement will have a positive impact on some of November’s scores, following the government’s pledge to effectively cut taxes by increasing the income tax threshold, a move that will give consumers a little more money to spend each month.

The basic rate threshold is set to rise to £12,500 and the higher rate to £50,000 from April 2019, up from £11,850 and £46,350 respectively now.

GDP growth, however, is relatively slow, especially compared to historical figures, over the next five years. It is expected to increase by just 1.3% in 2018, 1.6% in 2019, 1.4% in 2020, 1.4% in 2021, 1.5% in 2022 and 1.6% in 2023. Critics have called the growth figures “dismal”.