UK consumer confidence slipped in October despite an uptick in consumer enthusiasm for spending, which is more worrying than reassuring as surging credit card use fuels spending at the expense of saving, new figures show.
GfK’s latest Consumer Confidence Index saw a decrease of one point to -10 in October, with two of the five measures used to calculate the Index seeing an increase this month, while two decreased and one remained the same.
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The Major Purchase Index, however, was up for the third month running, rising two points to +3, but still 11 points lower than October 2016.
Meanwhile, the measure for the country’s general economic situation during the last 12 months has decreased one point to -29, ten points lower than October last year. Expectations for the next 12 months have decreased two points this month to -26, nine points lower than this time last year.
The index measuring changes in personal finances during the last year has increased one point this month to 0, three points lower than October 2016. The forecast for personal finances over the next 12 months has stayed at +4 this month, two points lower this time last year.
Joe Staton, head of market dynamics at GfK, says it’s no surprise the Overall Index Score continues to bump along in negative territory this month. “As concerns about the wider economic prospects for the UK economy dampen our outlook, consumers are showing no real ‘get-up-and-go'”.
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By GlobalDataHe adds the “tiny shift” up a point in how we view our personal finances over the past year is counter-intuitive given rising living costs, an imminent interest rate rise, and the reality that we earn less in real terms in 2017 than in early 2006.
“Our enthusiasm for spending, as witnessed by the uptick in the Major Purchase Index, is more worrying than reassuring,” he says. “Surging credit card use is fueling spending at the expense of our appetite for saving, which is growing at the slowest rate since the start of the 2008/2009 financial crisis. We are now entering the crucial Christmas trading season and it will be a testing time for retailers and consumers alike. Will consumers carry-on shopping or start to cut-back in the face of mounting pressure on our pockets?”
The survey was conducted amongst a sample of 2,043 individuals aged 16+ on behalf of the European Commission.
