Consumer confidence falls slightly ahead of Budget

UK consumer confidence fell slightly in October, according to fresh survey results released on Friday, with GfK’s consumer confidence index dropping one point to -21.

The report revealed a mixed outlook, with indicators for personal finances and major purchases improving, while sentiment on the general economic situation continued to deteriorate.

The index tracking personal finances over the last year fell by one point to -10, though that was still nine points better than a year ago.

Looking ahead, consumers appeared cautiously optimistic about their own financial outlook, with the measure for personal finances over the next 12 months rising by one point to -2, six points higher than in October 2023.

However, concerns about the broader economy weighed on overall confidence.

The index for the general economic situation over the last 12 months dropped five points to -42, though it remained 12 points higher than a year earlier.

Expectations for the economic situation over the next year also dipped by one point to -28, slightly better than the previous year’s figure.

Despite the concerns, consumers’ willingness to make major purchases showed some resilience, with the major purchase index rising two points to -21, a notable 13-point improvement year-on-year.

Additionally, the savings Index increased by four points to +27, reflecting slightly stronger sentiment towards saving compared to October 2023.

“Consumer confidence fell one point this month to -21, taking the score back down to the level last seen in March this year,” said GfK consumer insights director Neil Bellamy.

“Also falling one point are both personal financial situation over the last 12 months and general economic situation over the next 12 months.

“The largest drop though was in our view of the general economic situation over the last 12 months, down five points to -42.”

Bellamy said that on the positive side, the major purchase index rose two points, and future personal financial expectations by one point.

“As the Budget statement looms, consumers are in a despondent mood despite a fall in the headline rate of inflation.

“This month’s consumer confidence barometer paints a picture of people holding their breath to see what’s in store for them on 30 October.”

Reporting by Josh White for Sharecast.com.