‘Brighter picture’: Consumer confidence inches upward

People’s future outlook of their personal finances continues to strengthen with a five-point jump.

Consumer confidence has increased for a second consecutive month, making for a “brighter picture” after a “long period of stasis”, according to the latest GfK Consumer Confidence Barometer.

The overall index score increased two points to –17, driven by a jump in four of the five measures compared to last month. Since May last year, consumer confidence has vastly improved, increasing 10 points from –27.

The May data was collected from consumers prior to news of the upcoming election and the current rate of inflation, which yesterday (22 May) fell to 2.3%, marking its lowest level in almost three years.

“Marketers know that plenty of people are still struggling to make ends meet and that means the cost of living crisis is not over,” Joe Staton, client strategy director at GfK tells Marketing Week. “But as inflation reduces, the spending power of consumers will grow. And as the consumer mood steadily brightens, marketing teams will tailor their strategies to ensure they are ahead of the curve.”

People are feeling more optimistic about their own personal financial situation over the last 12 months, which is up one point to –10.

The forecast for personal finances for the upcoming 12 months is up five points to 7, which Staton says is the “highlight” of this month’s results.

“It’s worth noting that the personal finances measure in September 2022 was a depressing -40, so today’s 7 is huge progress,” he adds.

Confidence in the general economic situation over the last 12 months is up two points to –39, and expectations for the general economic situation over the next 12 months have increased by four points to –17.

Staton says there’s a “warmer verdict” on the economy looking back a year and ahead 12 months.

“The economy scores of -39 and -17 are still in negative territory of course, but they are continuing their encouraging advance,” he adds.

Meanwhile, the Major Purchase Index, which represents consumers’ likelihood to buy big-ticket items, is down one point to -26. Staton highlights that the cost of living crisis is still a “day-to-day reality for all of us”.

Meanwhile, the Savings Index, which isn’t included in the overall score, increased one point to 27, which is eight points higher than this time last year.

“All in all, consumers are clearly sensing that conditions are improving. This good result anticipates further growth in confidence in the months to come,” Staton concludes.