Overall consumer confidence has stayed flat from November to December due to large item purchases, according to new research.
Research company GfK NOP’s latest Consumer Confidence Barometer records an index score of -21, the same as last month, but people’s confidence over their personal finances and the general economic situation has continued to drop this month.
Opinion about the general economic situation over the last 12 months has dropped five points to -51 and confidence in respondents’ personal financial situation over last 12 months fell three points to -16.
Nick Moon, MD of GfK NOP Social Research, commented: “At the moment consumer confidence is being propped up by one thing - a belief that the run-up to Christmas and the VAT hike is a good time for big-ticket retail purchases.
“This element of the index has distorted the overall index to make it appear static when in fact it is teetering on the brink.”
According to the study, the climate for major purchases rose ten points, nine points higher than this time last year, but with weather disruptions severely affecting retail in recent weeks businesses in the industry will worry that postponed sales will not be fulfilled in the new year.
Moon added: “Every other measure has fallen and without this one positive, consumer confidence would have fallen to its lowest level in over a year.
“Of course, the real test will come in January when festive spending ceases and the VAT increase comes in. Then we will finally see the full impact of how consumers are reacting to the first wave of austerity measures.”
The survey also showed that the ‘now is a good time to save’ index has decreased five points to -10 this month, which is two points lower than December 2009.