Consumers are feeling increasing confident in their personal finances this August, although their view on the UK economy is bleaker. This is according to GfK’s Consumer Confidence Barometer, which has been surveying consumers since 1974 to understand their willingness to spend money on products and services.
The view consumers take of their personal financial stability and wider economic situation can impact brands. This is as there will typical be less demand for products or services, an extended buying cycle, or a reliance on discounting when confidence is low. Here we will outline the key takeaways of this study and the possible impact on brands.
Key takeaways from the study:
- Overall consumer confidence has remained the same as in July, when it increased slightly to -13. Although 12-points higher than the previous year, this suggests there has been no broad boost in confidence following the recent general election.
- Whilst confidence in the general economic situation remained unchanged in July, it has seen a noticeable 4-point drop in August. Likely due to the gloomy messaging from the newly elected government of “tough times ahead”, this may remain pessimistic throughout the winter months.
- Consumers have increased confidence in their personal financial situation with this climbing by 3-points in August. Likely a result of recent drops in interest rates, this places confidence in their personal financial situation 9-points higher than in the previous year at +6.
- As in July, consumers are showing greater willingness for major purchases with the Major Purchase Index seeing a 3-point climb. This further suggests that despite overall confidence being stagnant, this is having a lesser impact on more considered high-value purchases such as cars, furniture, holidays etc.
The impact on brands:
- Despite what some had anticipated, July’s change of government does not appear to have significantly improved overall consumer confidence. However, the decision by the Bank of England to reduce interest rates at the start of August seems to have bettered consumers view of their personal finances.
- Brands selling more considered products or services may continue to see an uplift in intent with the Major Purchase Index remaining buoyant. But it should be noted that this study looks backwards, and its findings may not represent the mood moving forward.
- This study interviewed participants between the 1st – 15th August. So whilst it may indicate the view of consumers immediately following July’s general election, it may not reflect the view following numerous statements from the government in recent days. GfK’s update on the 20th September will provide us with a greater sense of how such statements have swayed consumer’s willingness to spend.
Whilst you may not be able to gain huge insight from a single month of consumer confidence data, analysis of several months can be an indication of the challenges brands may face as we head towards winter. We will publish further articles when updates of the GfK Consumer Confidence Barometer become available.
