While this month’s GfK research shows rising confidence in personal finances and spending money, expectations for the economy this coming year have once again dipped.
As the majority of lockdown restrictions have now been lifted in the UK, consumer confidence has risen higher than pre-pandemic levels, according to the latest GfK Consumer Confidence Index.
The overall index for July scores -7, marking six months of steady improvement. In March 2020, the last month before lockdown, consumer confidence sat at a score of -9.
“By that measure alone, we appear to have banished the bulk of the Covid impact,” GfK’s client strategy director, Joe Staton, tells Marketing Week.
“We’ve been through a lot between those two points and the scores – five months of -30 or worse and six months firmly mired in the -20s – underline how gloomy the consumer mood has been. Are we seeing a breakout now? Possibly yes.”
Staton also notes a willingness among consumers to spend money, with July’s major purchase index score of 2 the highest since February last year and a “healthy” 7 point increase since June. This aligns with strong retail growth figures, which reflect the gradual opening up of the UK high street and the release of pent-up demand.
“But marketers know what we are seeing now is the first wave of people letting go as they treat themselves to family gatherings, shopping trips, nights out, holidays and other activities that have long been out of bound,” he explains.
“Is it sustainable? Marketers will hope so, but they will also know that consumers need to see better Covid numbers first. The quicker that happens, the better.”
Nevertheless, people continue to feel confident in their personal finance situations over the coming year, with the forecast holding steady at a score of 11 for a second month. This is 11 points higher than this time last year.
However, expectations of the general economic situation over the next 12 months are less positive, having dropped by a further 3 points to -5.
According to Staton, this is likely a reflection of threats from increasing consumer price inflation, new Covid variants and rising infection figures, as well as the looming end of furlough.
“What happens across the remaining summer months will frame consumer confidence for the rest of 2021 and beyond,” he concludes.