Consumer confidence has been negative for 10 years
Consumer confidence inched up slightly this month despite remaining in negative territory, a leading survey has indicated, indicating a degree of “resilience” despite a decade of consumer pessimism.
The overall index score on GfK’s closely monitored consumer confidence survey rose by one point while feelings about personal finances over the next 12 months edged up four points.
The overall index, which takes various confidence indicators into account, remained in negative territory at -16.
It has now been 10 years since the index was in positive territory, reflecting people’s long-running dissatisfaction with stagnant living standards.
But sentiment about personal financial situations was now at a net reading of 6 compared to -2 at the same point last year.
People were also more confident about their personal financial situations over the last 12 months, according to the research firm.
Consumer confidence readings add to pressure on Labour
Keir Starmer has focused his government’s communications operations on plans to tackle the cost of living for millions of people.
But in a more damning assessment of the Labour government, Britons were more negative in readings relating to the general economy.
The net reading for the general economic situation over the next 12 months dropped two points to -31.
Neil Bellamy, consumer insights director at GfK, said the latest results were less about “optimism” than “resilience”.
“We remain a long way from consumers feeling that better days are around the corner,” Bellamy said.
“Yes, perceptions of personal finances have improved, but this is offset by growing concerns about the economy. We’ve seen this pattern before.
“During periods of political and economic uncertainty – most notably in late 2022 – consumers became more cautious but also more self-reliant.”
The GfL survey is frequently cited in Bank of England reports as a key indicator for consumer trends.
Researchers also measure people’s confidence about their savings pots.
Despite being four points higher on the month, the latest score, 28, was just two points lower than last year’s reading, posing a question to the effects four interest rate cuts have had on Brits.
Dovish members on the Bank’s monetary policy committee (MPC) have suggested that lower borrowing costs has not stimulated spending and demand remains weak.
External member Alan Taylor has suggested keeping interest rates too high for too long could put the UK economy at greater risk from suffering from a recession.
Recent figures showed inflation hitting 3.4 per cent in the year to December.
While economists have argued that inflation will rapidly slow down from April due to changes on energy pricing, some have suggested that high food price growth and sticky wage growth could put the Bank’s aims of bringing inflation down to 2 per cent at jeopardy.