Inflation and developing news surrounding the Omicron variant has hit consumer confidence, as this month’s GfK data shows drops in major purchase intentions, personal and economic outlooks over the next 12 months.
Consumer confidence in the UK has dipped and future forecasts on the economy and personal finances have also fallen as news on the Omicron variant arrives at the “worse time”.
GfK’s latest Consumer Confidence Barometer shows a one-point drop in the overall index score for December to -15, with three out of the five measures that make up the overall index score falling compared to November.
The decrease to the overall score follows a three-point increase between October and November.
“For marketers, Christmas is ideally a time when the high street buzzes with the excitement of happy consumers and shopping tills ring loudly. So, the current downturn in consumer sentiment is not good news,” GfK client strategy director Joe Staton tells Marketing Week.
“In July, our headline score reached -7 with the possibility that we’d soon see positive territory. But Omicron’s sudden appearance, and persistent worries about inflation and interest rates, has helped push us down to -15 as we approach Christmas.”
Consumer views on their personal financial situation and the economy over the next 12 months are both down by one point, as concerns rise on the standard of living and bill payments. The pandemic is “back to being the nation’s number one concern”, says Staton.
Personal financial situation and outlook for the economy over the last 12 months are both up by two points and one point, respectively.
The largest dip is seen in major purchases, which is down by three points to -6, which illustrates “growing caution around big-ticket purchases”.
“That impacts Christmas of course, but it also affects the January sales. Now more than ever, people will be looking at the brands they trust with an eye on product quality and payment terms,” says Staton.
The analyst warns consumers are “acutely aware of prices” with 87% believing prices have risen over the past year, compared to 66% believing this in December 2020.
More than four in five people (82%) forecast more price rises in 2022, an increase of 11 percentage points compared to December last year. “Next year will be challenging; we are not out of the woods yet,” concludes Staton.