GfK’s UK consumer confidence index fell in October for the third consecutive month as the economy was hit with labour and fuel shortages, as well as a rise in COVID cases.
The index decreased four points to -17 in October. All measures were down in comparison to the month before.
Expectations for the general economic situation over the coming 12 months have fallen by 10 points to -26, although this was still 24 points higher than October 2020.
“After six-months of robust recovery in the first half of 2021, UK consumer confidence has taken a turn for the worse with all vital signs weakening,” said Joe Staton, client strategy director at GfK.
“The sharpest concern is how consumers see the future economy, with this collapsing 10 points this month just as it did in September.”
This comes “against a backdrop of cheerless domestic news – fuel and food shortages, surging inflation squeezing household budgets, the likelihood of interest rate rises impacting the cost of borrowing, and climbing COVID rates”, he added.
Staton also said that a further decline in the intention to make major purchases is worrying for British retail ahead of the upcoming holiday season.
This comes as UK’s retail sales volumes slumped last month, according to data from the Office for National Statistics. They were down for the fifth consecutive month, the longest continuous stretch on record.
“The financial mood of the nation has changed and consumers could do with some strong tonic to lift their spirits," said Staton.
The index measuring changes in personal finances over the last 12 months dropped one point to -5. This was four points better than a year ago.
The forecast for personal finances decreased four points to 1.
The major purchase index decreased by four points to -10 in October; 17 points higher than it was this month last year.
The savings index has stayed the same at 22, eight points higher than this period in 2020.
“From the health of the UK’s supply chains to the health of its citizens, the state of the nation’s preparedness for winter will have unsurprisingly led to this latest dip in consumer confidence.” said Linda Ellett, head of consumer markets, leisure and retail at KPMG UK, said.
She said that when there is concern amongst consumers around the availability of their favourite seasonal products, demand grows with it.
This leads to grocers and their suppliers already experiencing seasonal peak as they look to meet the early rush.
“Time will tell what impact the rising number of COVID cases may have on consumers’ level of confidence. However, while there is ongoing high demand for products, it might be that we may now see a ‘buy early, buy twice’ effect - a silver lining for businesses responding to the early Christmas rush,” she said.
"Psychology and sales data alike tell us that when consumers buy earlier on in the season, they tend to buy more overall.”
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