UK consumer confidence dips again in January, outlook weak

By

Nigel TAYLOR

Published
Jan 20, 2023

The slight rally in consumer confidence in the final quarter of last year proved to be short-lived with the January Blues making an unwelcome return. And we’re in for a “bumpy ride” this year, according to data and intelligence group GfK.

Consumer confidence this month has dropped three points to a reading of -45 and continues to bump along at near-historic lows, the long-running Consumer Confidence Index showed Friday.

Following grim UK retail news on Friday, that fact just adds to the pessimism about retail’s prospects this year.

The wider reading showed four measures were down and one was up, compared to December’s announcement.

The index measuring changes in personal finances over the last 12 months fell three points to -31, some 25 points lower than January 2022. The forecast for personal finances over the next 12 months did increase to -27, but it was also 25 points lower than this time last year.

The measure for the general economic situation of the country during the last 12 months was down five points at -71, some 24 points lower than in January 2022, while expectations over the coming 12 months were also down by one point to -54, down 22 points on last January.

The biggest dips of all came in the Major Purchase Index, and the Savings Index both falling by six points. The former hit a reading to -40, a hefty 30 points down on the same month last year, while the latter’s reading of +14 is one point lower than this time last year.
 
Overall, it means consumers won’t be making big purchases and will be trying to save their money. Whether that also means that in the absence of big purchases they might opt for small treats remains open to question. But if it was the case, it could help fashion and beauty in an otherwise tough period.
 
Joe Staton, Client Strategy Director, GfK said: “Consumers have a New Year hangover – but it’s of the economic kind – with high levels of pessimism over the state of the wider economy. And unlike a conventional hangover, this one won’t vanish quickly.
 
“With inflation continuing to swallow up pay rises, and the prospect of some shocking energy bills landing soon, the forecast for consumer confidence this year is not looking good. One thing we can be sure of is that 2023 promises to be a bumpy ride.”