Consumer confidence rises pre-Christmas, but long-term causes of concern remain

Consumer confidence is up across the board ahead of Christmas, according to the December results of analyst GfK’s barometer. Every category reported single-digit increases in consumer confidence – and overall sentiment is 20 points higher than the same period last year.

In December 2022 the overall index score – a combined measure of consumers’ confidence in their own financial situation and their perception of the state of the economy – stood at -42. This year that figure has risen to -22. While it is still negative, it is the second month in a row in which overall confidence has increased, following a precipitous fall in October.

According to the GfK research, consumers’ sentiment around their personal financial situation over the previous 12 months has risen two points to -14, a 14-point increase from where it stood in December 2022.

Meanwhile, people’s sense of confidence around their personal finances over the next year stands at -2, a one-point increase over last month. That figure stood at -29 in December 2022, suggesting a marked increase in the overall sentiment.

Consumers are more negative around the overall economic outlook for the UK, however. Sentiment about the economic situation over the next 12 months rose by a single point to -25, while the measure of the past 12 months increased five points to –44.

The GfK results come as the Bank of England announced interest rates are to remain unchanged at 5.25%, the highest level since 2008. The Office for National Statistics also found that the economy shrank 0.2% in October, suggesting that volatility will continue.

As a result of that longer-term uncertainty the major purchases index – the measure of consumers’ likelihood of making significant purchases – has also risen by only a single point. It now stands at -23: this time last year that figure was -34.

Joe Staton, client strategy director at GfK, tells Marketing Week the scores are reflective of 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.”

“Consumers seem determined to find reasons to be optimistic, despite the limited good news on the economy and our financial prospects. Perhaps people are thinking that troubled times have gone on long enough and that surely a change for the better is just around the corner? They may well be right – but they could just as easily be wrong.”

The increased optimism will be welcome news for brands and marketers, many of whom have been prioritising consumer concerns around the cost of living in their Christmas marketing.