MNI DATA: UK Consumer Sentiment Falls Back in October: GfK

--October GfK Consumer Confidence Index -10 Vs -9 in September

By Jamie Satchithanantham

     LONDON (MNI) - Consumer sentiment fell back in October with consumers ever

more apprehensive over the near-term economic landscape, a report published

Tuesday showed.

     The GfK October Consumer Confidence Index fell by a solitary point to -10,

wiping out the gain registered last month and halting a run of two consecutive

monthly increases. Just two of the five components that make up the headline

index were higher on a month ago readings.

     Households were increasingly anxious in their assessment of their economic

security in October. Over the next 12 months, a greater proportion of

respondents felt the general economic situation would deteriorate. The

associated indicator slipped by two points to -26, nine points lower than

recorded last October.   

     Despite this, consumers said they felt slightly more optimistic about their

personal finances in October. The Personal Finance Situation indicator, looking

at the past 12 months, rose by a point to the neutral-0 level while the same

indicator gauging the forthcoming next 12 months was unchanged at +4. 

     These were below, but not far off, the indicators' respective October 2016

outturns of +3 and +6. 

     As inflation has risen rapidly over the last year, eroding real incomes in

the process, consumers' appetite to spend has appeared to hold up, sparking

fears over household indebtedness in the UK and consumers' ability to repay

liabilities. 

     The Major Purchase Index, gauging household's appetite for big-ticket

items, rose again in October, rising two points to +3. The Savings Index (not a

sub-component of the main headline index) held firm at +3, above the long term

average of +9.     

     Joe Staton, Head of Market Dynamics at GfK, said "The tiny shift up a point

in how we view our personal finances over the past year is counter-intuitive

given rising living costs, an imminent interest rate rise, and the reality that

we earn less in real terms in 2017 than in early 2006".

     Staton was worried that household spending was potentially being propped up

by excessive credit card usage at a tome when consumers should perhaps be

prioritising increasing their savings. 

     "Our enthusiasm for spending, as witnessed by the uptick in the Major

Purchase Index, is more worrying than reassuring. Surging credit card use is

fuelling spending at the expense of our appetite for saving, which is growing at

the slowest rate since the start of the 2008/2009 financial crisis."

     Looking forward, the upcoming Christmas trading season, he predicted, would

be a "testing time for retailers and consumers alike".

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

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