UK consumer sentiment drops in June - GfK

Consumer confidence in the UK dropped in June, according to the latest survey from GfK.

GfK's long-running consumer confidence index fell to -13 this month from a 17-month high of -10 in May. Analysts had been expecting a reading of -11.

The survey found that householders became more downbeat about the prospects for their personal finances, with the index for the personal financial situation over the next 12 months down to 2 in June from a reading of 5 in May.

The gauge for the personal financial situation over the last year fell to -1 from 3, while the index for the general economic situation over the last year slipped to -32 from 30. The gauge for the general economic situation over the next 12 months, meanwhile, declined to -33 from -29.

The savings index, which is not included in the overall index score, pushed up to 19 in June from 16 the previous month, rising for the third month in a row.

Joe Staton, client strategy director at Gfk, said: "Perhaps scores clustered around -13 are to be the 'new normal’ for consumer confidence? While UK consumers continue to remain concerned about the wider economy, over which the woman or man in the street has no control, of greater worry are the falls in the measures for personal finance. These better reflect our hopes and fears for our everyday financial futures and this, coupled with a decline in the major purchase index, could point to a turbulent time for the economy over the summer months.

"Despite more of us agreeing that 'now is a good time to save', the official savings ratio (the percentage of disposable income being saved) stands at near historic lows as households must either dip into their savings or go into debt to fund the cost of day-to-day living. This is important because, without the security of a savings buffer, consumers may well be unable to absorb the impact of any downturn a no-deal Brexit might deliver."

Shore Capital said: "It appears that the slight optimism that was shown in May’s report was short lived. Due to the political uncertainty still being apparent in British consumers’ minds, despite the push back in Brexit negotiations giving us more time, we do not expect to see a huge change in the index until we are provided with a more clear plan for the British Government."