Consumer confidence is inching up, but are shoppers ready to spend big with retailers?

Headline figures

• The index measuring changes in personal finances during the last year is unchanged at -10; five points better than June 2023.
• The forecast for personal finances over the next 12 months is down three points at +4; five points higher than this time last year.
• The measure for the general economic situation of the country during the last 12 months is up seven points at -32; 22 points higher than in June 2023.
• Expectations for the general economic situation over the next 12 months have increased by six points to -11; 14 points better than June 2023.
• Major purchase index is up three points to -23; two points higher than this month last year.
• Savings index has decreased five points to +22 in June; three points lower than this time last year.

What GfK says

GfK client strategy director Joe Staton says: “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.

“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.”

What it means for retail

Perhaps the biggest silver lining for retailers is the fact that consumers are beginning to feel more confident about the next 12 months personally. While that figure slipped in June, it remains the only GfK metric that is positive.

The figures will make for more interesting reading after the election on July 4. Labour looks set for a large majority, which in the past may have upset consumer confidence given that the Conservatives has long been able to style itself as the party of fiscal responsibility.

However, with most polls showing that voters now consider Labour more trustworthy on issues relating to the economy, its expected victory may bring a further bounce to consumer confidence.

While things continue to improve in terms of consumer confidence, it looks unlikely that this year will see shoppers open the taps and begin spending freely. Most of the confidence metrics remain in the negative and retailers will need to continue to focus on offering value to lure consumers into parting with their hard-earned money.

With confidence in the economic situation over the next 12 months looking to be tracking upwards, retailers may be looking towards 2025 as the year when the situation may finally turn from better to best.