Consumer confidence in the UK has seen a sustained increase for the third consecutive month, according to the latest survey by GfK. The Consumer Confidence Index climbed by three points in June, reaching a score of minus 14, reflecting a growing optimism about the economy among consumers.
Steady Improvement in Consumer Sentiment
The GfK survey reveals a notable rise in consumer confidence, driven by improved perceptions of the general economic situation over the past year and heightened expectations for the coming year. Specifically, confidence in the economy over the past 12 months saw a significant seven-point increase, while expectations for the economy in the next 12 months surged by six points.
Joe Staton, Client Strategy Director at GfK, commented on the findings:
“Once again we have an improved reading for the Overall Index Score with June showing a three-point improvement bolstered by consumers’ more sympathetic view of the economy for the last year and the 12 months to come. Those measures on the economy registered sharp increases of seven points and six points respectively, and there was a welcome three-point boost in intentions to make major purchases.”
Challenges Persist Despite Optimism
Despite the positive trends, the overall consumer confidence score remains in negative territory at -14. This reflects the ongoing challenges many households face due to the persistent cost-of-living crisis, which continues to strain household budgets. Nevertheless, the current score represents a significant recovery from the record low of -49 recorded in September 2022.
Staton highlighted the importance of financial stability for continued confidence growth:
“While June’s reading of -14 is the third month in a row that confidence has increased, the headline score remains negative owing to the difficulties so many have experienced as the unrelenting cost-of-living crisis batters household budgets. Nevertheless, consumer confidence continues its robust long-term upward trend this month, and has recovered significantly since the record low of -49 reached in September 2022. Consumers like financial certainty, and this has to be the cornerstone if we are to see confidence break out into positive territory.”
Key Factors Influencing Confidence
The survey also indicated a three-point increase in consumers’ intentions to make major purchases, suggesting that despite economic challenges, there is a growing willingness to spend on big-ticket items. This rise in purchasing intentions is a positive indicator for the retail sector and overall economic activity.
Future Outlook
As consumer confidence continues to improve, the focus now shifts to sustaining this positive momentum. Ensuring financial stability and addressing the cost-of-living crisis remain critical to further boosting consumer sentiment and potentially moving the confidence index into positive territory.
Conclusion
The steady rise in consumer confidence over the past three months signals a cautious but growing optimism about the economic future among UK consumers. While challenges persist, the upward trend is encouraging and highlights the resilience of consumer sentiment in the face of ongoing economic pressures.
