Data: Consumer confidence drops for third month in a row

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October marked the third month in a row that consumer confidence fell as consumers faced ongoing fuel and food shortages and rising inflation, as well as a growing number of Covid-19 cases.

Overall sentiment in GfK’s consumer confidence index fell by four points to -17 in October. All measures recorded by the index were down compared to September.

Consumers expressed slight concerns about their personal finances over the next 12 months with the index decreasing by one point, but four points better than in October 2020.

Expectations for the general economic situation across the UK in the next year dropped by 10 points this month to -26. However, this is 24 points higher than the same time in 2020.

The major purchase index decreased by four points in October, while the saving index was unchanged from September, standing at +22, illustrating that consumers are leaning towards saving rather than spending in an uncertain economic period.

GfK client strategy director Joe Staton said: “After six months of robust recovery in the first half of 2021, UK consumer confidence has taken a turn for the worse with all vital signs weakening.

“The sharpest concern is how consumers see the future economy with this collapsing ten points this month just as it did in September. Against a backdrop of cheerless domestic news – fuel and food shortages, surging inflation squeezing household budgets, the likelihood of interest rate rises impacting the cost of borrowing, and climbing Covid rates – it is not surprising that consumers are feeling down-in-the-mouth about the chilly winter months ahead.

“Worryingly for British retailing in the run-up to Christmas, there’s a further decline in the intention to make major purchases. The financial mood of the nation has changed and consumers could do with some strong tonic to lift their spirits.”