Consumer confidence dips as mounting economic pressures begin to bite

28th February 2017

Elias Jahshan

General Retail

Consumer confidence in the UK dipped slightly last month, as the post-Brexit referendum spending boom begins to soften and concerns for personal financial situations rises.

The GfK‘s long-running Consumer Confidence Index has decreased one point this month to -6, while the YouGov/Cebr Consumer Confidence Index declined slightly by -0.2 points this month to 109.4.

Both figures are notably below the level it was at before the UK voted to leave the EU in June.

GfK head of market dynamics Joe Station said rising food and fuel prices, the depreciation of the sterling, minimum earnings growth and fears of inflation have all contributed to the concern about personal financial situations for 2017.

He warned that any further fall could be bad news for the overall economy this year.

“Any momentum behind the post-Brexit, debt-fuelled, consumer-spending boom now appears to be softening,” he said.

READ MORE: Consumer confidence explained

“Mounting pressures on disposable income are starting to bite as witnessed by two months of falling retail sales (according to the ONS) and a further drop in the major purchase index.

“Consumer spending continues to drive economic growth in the UK so any further fall in confidence could support forecasts for a slowdown of the overall economy this year.”

Three of the five measures used to determine GfK‘s overall Consumer Confidence Index decreased in February.

This includes personal finance, which dropped +1, two points lower than January and four points lower than this time last year.

The forecast for personal finances over the next 12 months has also decreased by four points this month to +3, which is also five points lower than February 2016.

Another measure which saw a decline included the major purchase index, which decreased five points since January to +5 – seven points lower than this time last year and an indication that Brits are becoming more increasingly cautious with their big-ticket spending.

The savings index also decreased two points to -4 since January, and two points lower than February 2016.

However, the GfK found that consumers were more upbeat about the UIK‘s general economic situation, which during the last 12 months has increased three points this month to -21. While an improvement, this figure is 11 points lower than February 2016.

Expectations for the general economic situation over the next 12 months have increased three points this month to -20 – eight points lower than February 2016.

For YouGov/Cebr‘s consumer confidence barometers, 6000 respondents were asked about household finances, property prices, job security and business activity for the past 30 days and for the next 12 months.

Four of these eight measures declined in February, with the most notable fall in job security which has slipped to its lowest level since December 2014.