‘Everything is going south’: Consumer confidence plummets as living costs soar
As consumers face price hikes and interest rate rises confidence in the economic situation is dwindling, so marketers are encouraged to adjust their strategies accordingly.
Consumer confidence has dropped to levels last seen in October 2020 as the cost of living crisis worsens.
The latest GfK Consumer Confidence Barometer shows a headline score of -31, a five-point drop compared to February and the fourth month in a row it has declined.
All five measures worsened versus last month, with the major purchase index taking the biggest knock, falling nine points to -24. This compares to a score of -11 seen in March 2021.
Consumers’ outlook for the general economic situation over the coming year has also plummeted six points to -49, well below the -17 recorded for the same period last year.
“Everything is going south – that’s for sure,” Joe Staton, client strategy director at GfK tells Marketing Week. “Consumer sentiment is extremely fragile and the clearest indicators for that are on the general economy looking ahead a year, down six points in March and the major purchase measure, off by a massive nine points to -24.
“The purchasing mood has not been that low since January 2021. Consumers clearly do not think now is a good time to spend and plan for their future, and that’s because negative economic headwinds are buffeting the financial mood of the nation this spring.”
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People’s view of the economic situation over the past 12 months is also down one point to -51, but this is an improvement on the -60 recorded in March 2021.
Meanwhile, consumers’ view of their personal financial situation over the next year has taken a four-point hit to -18. This is far lower than this time last year when the figure was in positive territory at 10 and reflects the “wall of worry” confronting consumers this month.
People’s view of their personal financial situation over the past 12 months has also fallen two points to -13, down from -2 in 2021.
Staton says “nobody can expect anything different” in the face of spiralling prices for food and fuel, higher energy bills and the expectation of further interest rate rises. People’s confidence in the wider economy is also being “severely depressed” by the war in Ukraine.
“Consumers across the UK are experiencing the impact of soaring living costs with 30-year-high levels of inflation, record-high fuel and food prices, a recent interest-rate hike and the prospect of more increases to come, and higher taxation too – all against a background of stagnant pay rises that cannot compensate for the financial duress,” he adds.
“Marketers can be forgiven for sharing in the sense of gloom because there is little prospect of any short-term relief on any of the factors that are clouding the horizon. Now more than ever, brands must continue to be sensitive to the challenges out there and adjust marketing strategies accordingly.”
