UK consumer confidence edges up after stagnant start to year

UK consumer confidence improved by two points in April, after laying stagnant in March. 

GfK’s consumer confidence reading stood at -19 point during the month, an improvement from -21 points in both March and February. 

Its major purchase index – which takes the temperature on Brits likeliness to make a big splurge– also fell two points to -25. 

The forecast for the public’s personal finances over the next 12 months remained the same as last month. 

Joe Staton, client strategy director GfK, said: “Headline confidence edged forward in April to -19. There was a welcome repeat of the March +2 score for how consumers feel about their personal finances in the next 12 months. 

“While the Overall Index Score remains negative, all of the underlying five measures this April are significantly better than they were last April.”

He added: “These improvements reflect the impact on household budgets of lower inflation and the anticipation of further tax cuts. However, we are a long way from the much firmer sentiment last seen in the period before Brexit, Covid and the conflict in Ukraine.”

“There is a lot of ground to make up, and caution is needed in the face of continuing economic and fiscal challenges, and revised views on when the Bank of England might cut borrowing costs. 

“But Spring has arrived and maybe consumer confidence is, at last, slowly becoming brighter and heading in the right direction.”

There are hopes that barriers which prohibit customers losing their purse strings, such as high energy bills and inflation, will improve this year. 

UK grocery inflation has also been in a steady decline, helped by customers shopping at a discount. 

Linda Ellett, UK head of consumer, retail and leisure for KPMG, said: “While it’s welcome to see confidence levels rising, households are still feeling squeezed, so it’s not yet equating to a consistent and significant upturn in consumer spending.

“Of the 3000 consumers recently surveyed by KPMG about Q1 2024, only three per cent said they had been able to increase their discretionary spending.  And half of the group said they’ve had to cut their spend further since 2023 ended due to their household essential costs.”

He added: “A quarter with savings are using them to help meet essential costs, or plan to pay down their mortgage.  This is limiting intention to spend savings on big ticket purchases, bar holidays and home improvements.”

“Whether an economic upturn changes that remains to be seen, but consumers told us they are four times more likely to save than spend should their current costs ease.”