Consumer confidence remains in gutter despite World Cup and heatwave

UK consumer confidence remained negative in July despite the summer heatwave and England's strong World Cup run, according to a long-running consumer confidence survey.

Data from GfK, released on Tuesday, showed that the headline consumer confidence index dipped by one point to -10 across July, and expectations for the general economic situation over the next 12 months fell one point to -26, though this is still two points higher than at the same point last year.

Retailers will wince at a fall in the 'major purchase' segment of the index, which slipped below zero to -2.

Joe Staton, client strategy director at GfK, said that in spite of the several potential boosts to the nation’s psyche over the month, the consumer confidence barometer again revealed a decline and overall index has registered at zero or negative since February 2016.

Weak wage growth and Brexit uncertainty stymied the consumer mood over the month, despite retailers reaping the benefits of the hot weather, Staton suggested.

The 2,000 members of the public surveyed were optimistic on their own economic prospects however, with confidence in their own personal finance position and the wider economic situation increasing one point apiece.

“In this environment, any bad news such as a surprising uptick in inflation with the expectation of a corresponding increase in interest rates, or any adverse political event either at home or abroad, would likely have an exaggerated downward drag on consumer confidence,” said Staton.

Analysts at Shore Capital said an increase in food prices caused by the warm weather seen in the Northern hemisphere could be the catalyst for such an erosion of the improvements in consumer confidence.

The decline in the overall index was "perhaps not surprising given the political and economic uncertainty from the protracted Brexit negotiations with, an ever deteriorating view of trust in politicians", though the tick down in consumer confidence was "somewhat surprising given that the exceptionally warm weather in recent weeks which should have boosted consumer morale and released some pent up consumer demand".

Ahead of the Bank of England monetary policy meeting on Thursday, ShoreCap added: "In terms of consumer outlook it remains to be seen what effect any potential interest rate rise will have."