Consumers show sharp contrast between views on personal versus national finances
Consumers’ sentiments around their personal finances are improving, while sentiments around the general UK economy are on the decline, according to August’s GfK Consumer Confidence Index.
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Consumers’ sentiments on their personal finances are becoming more positive, while they remain negative on the wider UK economy, presenting an overall mixed picture in August’s GfK Consumer Confidence Index.
The headline figure for August is unchanged from last month at -13. July’s overall consumer confidence figure was at the highest level since September 2021, meaning consumers are continuing to feel more confident than they have done for almost two years.
The figures demonstrate a contrast between how consumers feel about their personal situations versus the wider outlook.
Looking back over their personal finances over the last year, consumers are more positive than they were last month, with this score up one point to -7. While that remains in negative figures, it is eight points higher than at this time last year.
When looking to the future, consumers are even more optimistic. The score for how consumers feel about their personal finances for the next 12 months has risen by three points to +6, nine points ahead of this time last year.
In contrast to improving personal scores, confidence in the general UK economy has continued to decline. Looking back over the past year, confidence in the UK economy is down three points on last month to -35. This may appear very negative, but is actually 17 points higher than the index in August 2023.
Despite a change in government last month, expectations for the general economy looking ahead to the next 12 months are down four points to -15. This is 15 points better than at this time last year.
GfK client strategy director Joe Staton describes a “tussle between strong sentiment on personal finances versus a weaker take on the wider UK economy”.
“But the question marketers should watch is the one on whether people feel now is the ‘right time’ to make major purchases,” Staton tells Marketing Week.
The Major Purchase Index, which looks at how confident consumers feel about big ticket items, has risen by three points to -13, 11 points higher than it was in August 2023. This is the highest this score has been at since January. However, Staton also notes that these scores took a big knock over Covid, with the index plunging to -52 in April 2020.
“The slow recovery that followed was upset by the inflation that kicked in during 2022. So the improving trend we see these days is good news for brand owners, especially as the golden quarter starts soon and November’s Black Friday is already looming,” comments Staton.
As well improving scores for major purchases and personal finances, Staton points out that the key numbers are “significantly more encouraging” than they were a year and two years ago. A key test for the UK consumer will be whether these more positive scores can last into the autumn and winter.