Consumer confidence grows ahead of Christmas, yet underlying concerns persist
Consumers' optimism grows as Christmas approaches, but underlying concerns persist, says GfK's latest consumer confidence barometer
The December results of analyst GfK’s barometer show a positive increase in consumer confidence across all categories ahead of Christmas. Compared to last year, overall sentiment is 20 points higher, with every category reporting single-digit increases in consumer confidence.
In December 2022, the overall index score stood at -42, but this year the figure has risen to -22, marking the second consecutive month of overall confidence increase after a significant decline in October. Though still in the negative, the upward trend is evident.
Based on GfK research, consumers' confidence in their personal financial situation over the past year has increased by two points to -14, marking a 14-point increase since December 2022. Looking ahead, people's confidence in their personal finances for the next year has also improved to -2, showing a one-point increase from last month and a significant change from the -29 recorded in December 2022.
Consumer sentiment towards the overall economic outlook for the UK has become more pessimistic. Expectations for the economic situation over the next 12 months have only increased by one point to -25, while the measure of the past 12 months has risen by five points to –44.
The latest GfK results coincide with the announcement from the Bank of England that interest rates will remain unchanged at 5.25%, the highest level seen since 2008. Additionally, the Office for National Statistics reported a 0.2% contraction in the economy in October, indicating ongoing volatility.
As a result of that longer-term uncertainty, the major purchases index – the measure of consumers’ likelihood of making significant purchases – has also increased by only a single point, now standing at -23. This time last year, that figure was -34.
Joe Staton, client strategy director at GfK, tells Our Website that the scores reflect British consumer resilience: “The direction of travel in the consumer mood was very much down in 2022, but the resilience was evident in 2023 as the outlook steadily improved.”
Despite the limited good news on the economy and our financial prospects, consumers are determined to find reasons to be optimistic. It could be that troubled times have lasted long enough for people to believe a change for the better is imminent. However, this optimism may be well-founded – or it could just as easily be misplaced. This increased optimism will be a welcome development for brands and marketers, particularly those who have been focusing on consumer concerns about the cost of living in their Christmas marketing efforts.
