Confidence drops in July as reality bites resilient consumers

UK consumer confidence fell by six points in July as all measures declined, including big-ticket items.

According to the latest GfK Consumer Confidence Index, overall figures saw a decrease by six points to -30 in July 2023.

The Major Purchase Index, which includes big ticket items such as furniture, is down seven points to -32; this is two points higher than this month last year.

The measure for the general economic situation of the country during the last 12 months is down four points at -58; this is eight points higher than in July 2022. 

The index measuring changes in personal finances during the last year is down five points at -20; this is three points better than July 2022.

The Savings Index is up one point to +26; this is 13 points higher than this time last year.

Joe Staton, Client Strategy Director GfK, says: “For the first six months of 2023, UK consumer confidence improved despite the headwinds of the cost-of-living crisis, with double-digit inflation outpacing income growth and rising interest rates impacting both home-owners and renters alike. Suddenly, this resilience has collapsed, resulting in a six-point fall this month in the headline score.

“There are clear concerns for the coming year for our personal finances and for the wider UK economy, with these measures down six and eight points, respectively. The recent fall in headline inflation will do little to improve the financial mood; consumers need to see falling prices and interest rates before that happens.

“Reality has started to bite and, as people continue to struggle to make ends meet, consumers will pull back from spending, as is clear from the seven-point drop in this month’s measure of major purchase intentions. All in all it’s bad news. People are feeling economic pain and this confidence deficit needs to be reversed before the gains this year are lost.”

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