MNI INTERVIEW: Key UK Consumers See Sharp Confidence Dip

UK consumer sentiment fell in July, with some key demographic groups reporting a noticeable decline in outlook, the head of a leading market survey told MNI.

"UK consumer confidence improved in early 2023 despite the headwinds, but suddenly, this resilience has collapsed, resulting in a six-point fall this month in the headline score," Joe Staton, Client Strategy Director at GfK, said in an interview.

The Gfk Overall Consumer Confidence Index fell six points to -30, almost midway between the historical average -10 and the record low -49 seen in September 2022. The index was last at -30 in April as it continued to rally off autumn 2022 lows. (MNI INTERVIEW: Green Shoots For UK Consumer Despite Inflation-Gfk)

But there was a more marked decline in the outlook amongst benchmark demographics, Staton said, with consumers in London, the key 30-49 year-old bracket and the average wage earning group recording declines of 15 points, 15 points and 13 points respectively.

If the data is a lead indicator, the weakness in these key groups suggests a tougher time is coming for most consumers, Staton said.

STILL ABOVE LOWS

Some of the wider categories within the Gfk monthly survey were also weaker, with "Personal Financial' outlook" and "General Economic" outlook indicators both falling sharply, albeit remaining well below the lows seen in Summer 2022 in the wake of the Russian invasion of Ukraine

"There are clear concerns for the coming year for our personal finances and for the wider UK economy, with these measures down six and eight points, respectively. The recent fall in headline inflation will do little to improve the financial mood; consumers need to see falling prices and interest rates before that happens," Staton said.

"Reality has started to bite and, as people continue to struggle to make ends meet, consumers will pull back from spending, as is clear from the seven-point drop in this month’s measure of major purchase intentions" and the pick-up in the Savings Intentions index, he noted.

"People are feeling economic pain and this confidence deficit needs to be reversed before the gains this year are lost,” Staton added.

However, Staton said the survey ran in the first two weeks of July and closed before the publication of better-than-expected June inflation data, which may otherwise have added a point or two to the index.