Joe Staton, Client Strategy Director at GfK, comments:
“The recent claims about the imminent end of austerity, and the good news of lower retail price inflation and accelerating wages growth would normally be sufficient to boost consumer sentiment. But the core Index slipped again this month.
"The prospect of a no-deal/hard-deal Brexit must surely be weighing heavily on people’s minds, injecting a mood of despondency as to how people view their future personal finances and the longer-term economic outlook for the UK.
"We also appear to be losing confidence that now is ‘the right time’ to make major purchases. This will concern retailers in the run-up to Black Friday, Cyber Monday and the key Christmas trading period. Consumers behave like financial markets – when confidence is lacking, markets stutter and tumble. When confidence comes back, we are more than willing to spend, borrow or save. However, with no immediate prospect of any feelgood news impacting our hearts, minds and wallets, the Index is set for further declines.
"It looks like the UK Government will need to administer an exceptionally strong tonic to the nation to settle the obvious Brexit anxieties.”
The Overall Index Score in October 2018 is -10. Three measures decreased in October and two stayed the same.
The index measuring changes in personal finances during the last 12 months has stayed at the same level this month at +1; this is one point higher than at the same point last year.
The forecast for personal finances over the next 12 months has decreased one point to +4 this month; this is at the same level as October 2017.
The measure for the General Economic Situation of the country during the last 12 months has stayed at -28 this month; this is one point higher than October 2017.
Expectations for the General Economic Situation over the next 12 months have decreased one point to -28; this is two points lower than October 2017.
The Major Purchase Index has decreased two points in October to +4; this is one point higher than October 2017.
The Savings Index has decreased one point to +12 in October; this is nine points higher than this time last year.
The UK Consumer Confidence Barometer is conducted by GfK on behalf of the EU, with similar surveys being conducted in each European country. In producing its own reports on the whole of Europe, the EU applies a seasonal adjustment to the data, to smooth out any changes that are functions, at least in part, of the time of year.
Historically, the UK data have not been seasonally adjusted in this way, and to maintain comparability, GfK continues not to apply this adjustment. This can lead to situations where the EU figures show different movements in a particular month from those produced by GfK. Individual months may be affected, but the long-term trend is not.
The UK Consumer Confidence Survey from GfK was conducted among a sample of 2,001 individuals aged 16+ on behalf of the European Commission.
Quotas are imposed on age, sex, region and social class to ensure the final sample is representative of the UK population.
Interviewing was carried out during 1st – 15th October 2018.
The figures contained within the Consumer Confidence Barometer have an estimated margin of error of +/-2%.
Results for the Consumer Confidence Barometer are normally available on the last working day of each month at 00.01am (unless the final working day of a month is a Monday, in which case the results are published on the Friday preceding the final working day). The release date for November is Friday 30th November 2018.
Any published material requires a reference to both GfK and the European Commission e.g. ‘Research carried out by GfK on behalf of the European Commission’.
This study has been running since 1974. Back data is available from 1996.
Below is an overview of the questions asked to obtain the individual index measures:
Personal Financial Situation (Q1/Q2): This index is based on the following questions to consumers: ‘How has the financial situation of your household changed over the last 12 months?’; ‘How do you expect the financial position of your household to change over the next 12 months?’ (a lot better – a little better – stay(ed) the same – a little worse – a lot worse)
General Economic Situation (Q3/Q4): This index is based on the following questions to consumers: ‘How do you think the general economic situation in this country has changed over the last 12 months?’; ‘How do you expect the general economic situation in this country to develop over the next 12 months?’(a lot better – a little better – stay(ed) the same – a little worse - a lot worse)
Major Purchase Index (Q8): This index is based on the following question to consumers: ‘In view of the general economic situation, do you think now is the right time for people to make major purchases such as furniture or electrical goods?’ (right time – neither right nor wrong time – wrong time)
Savings Index (Q10): This index is based on the following question to consumers: ‘In view of the general economic situation do you think now is?’ (a very good time to save – a fairly good time to save – not a good time to save – a very bad time to save) (Commented on but not included in the Index Score)