Consumer confidence has risen for the third month running, but without concrete good news on the wider economy, the UK is still “a long way” from emerging from this protracted period of collective gloomy sentiment.
The latest GfK Consumer Confidence Barometer shows the headline score is up six points to -30 in April. While the score is eight points better than April 2022, the figure is still firmly in negative territory and a sign of an entrenched lack of confidence in the economy.
Speaking to Marketing Week, GfK’s client strategy director Joe Staton says the latest figures give the “tantalising sense” that consumer confidence is solidly improving.
“But we need some good macroeconomic news to really put a rocket under these figures. Sadly, that good news is missing,” he says.
UK inflation fell by less than expected last month, dropping to 10.1% in March from 10.4% the previous month, according to figures from the ONS published this week. Economists had forecast inflation would come down to 9.8% in the month.
All of the measures which make up GfK’s headline score are up on March 2023. People’s view of their own personal financial situation over the next year has seen the most significant uptick, increasing by eight points to -13. It has improved by 13 points versus April 2022.
Looking back, perceptions of people’s personal finances over the past 12 months have also improved, rising by five points to -21. However, it is the only measure that has deteriorated versus the same month in 2022, dropping by two points from -19 in April 2022.
People’s perceptions of the general economy remain lower than their opinions of their own economic situation. In April, people’s perceptions of how the economy fared over the past 12 months rose by seven points to -55, this was versus -60 in the same month last year.
Looking forward, people are more optimistic about the general economic situation over the coming year than they were last month. This score is up by six points to -34. It is up significantly from April 2022, however, when it stood at -55.
The major purchase index score, which indicates people’s likelihood to buy big ticket items, also improved in April. It is up by five points to -28. It has also increased slightly versus the same month last year, when it was -32.
This month’s major purchase score is the highest it has been in a year, which may give a much-needed boost to retailers.
While the figures show green shoots of optimism among consumers, there is still a “brutal” cost of living crisis affecting many across the UK, Staton notes.
“In the face of that crisis, people have to be admired for showing the kind of optimism we are seeing in April’s consumer confidence results,” he says. “The coming months will show whether it’s misplaced optimism or not.”