Consumer confidence returns to growth despite inflation fears

Despite record breaking inflation and higher living costs, this month’s GfK data shows an increase to major purchase intentions and a positive outlook for the economy.

UK consumer confidence is back on the rise as future expectations for the economy and personal finances strengthen.

The latest Consumer Confidence Barometer from GfK shows a three-point jump in the overall index score for November. It increases from -17 to -14 this month, with four out of five measures up compared to October, although the majority still remain in negative territory.

The overall figure marks a return to growth following a four-point decrease between September and October.

“We are halfway through the golden quarter and media headlines announced the worst inflation for a decade,” Joe Staton GfK client strategy director tells Marketing Week. “But people make their own minds up on these things.”

Despite looming fears of higher prices and interest rates, the public perception of the economy over the last 12 months is up six points to -40.

“That suggests people are a little bit more forgiving about the turmoil of the past 12 months,” says Staton.

People’s view on the economy over the next 12 months is also up by three points to -23, with this “softening perspective of the economy…something marketers will welcome”, he adds.

The metric showing changes in personal finances over the past 12 months has dropped two points to -7, but the forecast for the next 12 months has increased one point to 2.

On personal finances, Staton says consumers are less “buoyant” which is important as it reflects day-to-day plans to spend or save and is a “strong driver of overall UK economic growth”.

In positive news for British retailers in the run-up to Black Friday and Christmas, there is a seven-point increase in the major purchase index, which climbs from -10 to -3.

“The most encouraging finding is on major purchase intentions with a seven-point jump that suggests consumers are more inclined than last month to spend,” Staton says.

“Marketers will be gratified to see that and hopefully the 2021 festive season will not be encumbered by the lockdowns and worry of last year. Moreover, it will only take a small improvement in sentiment in December to nudge this sub-measure back into positive territory, something we only saw once in 2021.”