Despite the ongoing cost of living challenge as inflation continues to outpace wage increases, consumer confidence made a surprising comeback in February. However, with the mood still “severely depressed”, brands are warned it’s “too early” to say if this signals recovery.
The latest GfK Consumer Confidence Index reveals a seven point rise in the headline score to -38 this month, though it remains 12 points lower than February 2022.
Speaking to Marketing Week, GfK’s client strategy director Joe Staton says the improvement is nevertheless “welcome news” following nine straight months of scores at -40 or worse.
“‘The optimist sees the doughnut, the pessimist sees the hole’. This is a well-known quote and judging by this month’s surprise seven point jump in the headline score, consumers might be seeing doughnuts for the first time in many months,” he says.
“A seven point jump is the kind of change in sentiment that can move the dial, but we obviously need something similar in March, then another optimistic jump the following month, and so on.”
All five of the measures which make up the headline score also improved compared to January. A particularly strong uplift was seen in consumers’ expectations for the general economic situation over the coming year, which has improved by 11 points to -43. This puts the score on a par with last year.
Consumers also feel more positive about their personal finances over the next 12 months, with the score increasing by nine points to -18. However, this is four points lower than in 2022.
Reflecting on the previous 12 months, perception of the UK’s economic situation over the year has also improved, up six points to -65. Likewise, consumers’ view of their personal finances during the last 12 months has increased by five points to -26.
The major purchase index, an indication of people’s likelihood to buy big ticket items, improved the least, up three points to -37. This score therefore sits 22 points lower than last year.
“While it’s too early to talk about ‘green shoots of recovery’, the uptick across all measures should be welcomed,” Staton says, suggesting consumers may be expecting a milder recession than economists have previously predicted, or that they may be “simply fed up” with hearing bad news.
He concludes: “The headline consumer confidence score is still severely depressed and the mood as well as the economy remain a long way off pre-lockdown levels, but a little consumer resilience might be what we need to soften any downturn in 2023.”