Consumer confidence has improved slightly this month, but with inflation increasing unexpectedly on Wednesday, going against forecasts the headline figure was likely to fall this year, the uptick “masks” the ongoing concerns people are feeling about their finances.
The overall index score increased by two points in March, according to the latest GfK Consumer Confidence Barometer, but at -36 it remains deep in negative territory.
Consumers are clearly still feeling unsettled, not helped by inflation increasing to 10.4% this week, coupled with the sudden collapse of Silicon Valley Bank and Credit Suisse being taken over by UBS.
“When consumers see a US-based bank suddenly collapse, and a pillar of the Swiss finance industry vanishes in a puff of smoke, they can be forgiven for feeling nervous,” Joe Staton, client strategy director at GfK, tells Marketing Week.
The overall index score is not far off where it was a year ago (-31) and consumers are “not getting big, compelling signs that life is going to get easier anytime soon”, he adds.
People’s view of their personal financial situation is perhaps the best indication of this, with the figure for the year ahead down three points to -21, while the score for the past 12 months remains static at -26.
“Wages are not keeping up with rising prices and the cost of living crisis remains a stark reality for most,” Staton says. “The recent budget will bring relief to some sections of the population but for now, many people are simply looking to survive day by day. Just having enough money to live right and pay the bills remains the number one concern for consumers across the UK.”
Both measures for people’s view of the general economic situation saw a three-point boost in March, but remain deeply negative. Consumers’ view of the economy over the past 12 months increased to -62, while for the year ahead it reached -40.
The major purchase index, an indication of how likely people are to buy big ticket items, also increased in March, up four points to -33.
But despite the slight improvement, the overall picture remains pretty bleak.
“Yes, there’s talk of UK inflation coming down but until people see price reductions in their utility bills, in their local supermarket or in high street stores, the consumer confidence picture will remain grey,” says Staton.
“The task for marketers is to see through the grey by ensuring they know as much as possible about what their target audiences are feeling and thinking, and to allocate marketing spend in the smartest and best-informed ways possible.”