High prices and flat earnings hit UK consumer confidence

GfK’s long-running Consumer Confidence Index, carried out on behalf of the European Commission, put confidence at -6, down one point from January and down six points from this time last year.

The last twelve months have been a turbulent time for consumer confidence, with GfK’s index in negative territory since April last year. It fell to -12 in July following the Brexit vote, only to bounce back to -1 by September, defying predictions of immediate economic disaster. But since then it has fallen again.

Rising food and fuel prices, the falling pound, little growth in earnings and fear of inflation are believed to have contributed. Joe Staton, head of market dynamics at GfK, also said that any momentum from the post-Brexit consumer-spending boom “now appears to be softening”.

“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,” Staton said.

Three of the five measures that GfK tracks (personal financial situation over the last 12 months, personal financial situation over the next 12 months, and the major purchase index) saw decreases in February, while two measures (general economic situation over the past 12 months and general economic situation over the next 12 months) saw increases.