Despite the continued weak economic conditions in the UK, GfK’s Consumer Confidence Index increased by two points to -17 in August, with four of the measures used to compile the figure up and one was down in comparison to last month:
Neil Bellamy, Consumer Insights Director at GfK, noted that the biggest change this month was in people’s confidence about their personal finances, with both scores up by three points. “This is likely due to the Bank of England’s August 7th cut in interest rates, delivering the lowest cost of borrowing for more than two years,” he said.
“The improved sentiment on personal finances is welcome, but there are many clouds on the horizon in the form of inflation – the highest since January 2024 – and rising unemployment. There’s no shortage of speculation, too, about what the autumn Budget will bring in terms of tax rises.”
Bellamy highlighted that while the overall -17 figure is the best this year, consumer confidence continues to move in a narrow band and there was no sense that it is about to break out into “fresher, more optimistic territory”.
He concluded: “The UK’s consumers are still in wait-and-see mode, and any surprises could result in sudden and sharp changes in sentiment.”
NAM Implications:
- Consumer confidence is still negative, and lower than August 2024…
- And no wonder, given there are many clouds on the horizon
- Inflation
- Rising unemployment
- Autumn Budget tax rises
- Consumers wait & see…
- …while the Bank of England (and the government)…
- …cross their fingers.
