Consumer confidence spirals downwards

UK consumer confidence hits a(nother) new low today but the picture is similar across Europe and the US where the spending habits of a majority of consumers are being reconsidered in the light of rising prices. 

Key figures

• GfK’s UK Consumer Confidence Index fell to -49 in September; the index has reached new lows in four of the last five months.
• Future-facing indicators are particularly bleak: confidence in personal finances in the coming year is down nine points to -40 while confidence in the economy in the next 12 months is down eight to -68.
• A separate study from First Insight found that, on average, 82% of consumers in France, Germany, Italy, Spain, the UK, and the US have less confidence to spend ahead of the holiday season.
• On average, 68% of consumers are most impacted by rising food prices, most notably in Germany at 78% with the UK and Spain closely following.
• German consumers report the most significant inflation-induced change in their shopping habits and say they are shopping more for deals and staying within a budget.
• The threat of recession concerns at least 92% of consumers in every country and two thirds, on average, believe that a recession is already underway. 
• Almost one-third of consumers overall acknowledge that they are saving less because of high prices, and 17% report that they are tapping into savings to cope with the cost of living crisis.

Why it matters

Falling consumer confidence and belt-tightening ahead of the crucial holiday season means brands and retailers may need to re-examine their pricing and promotional strategies. 

Key quote 

“Consumers are buckling under the pressure of the UK’s growing cost-of-living crisis driven by rapidly rising food prices, domestic fuel bills and mortgage payments. They are asking themselves when and how the situation will improve” – Joe Staton, Client Strategy Director, GfK. 

Sourced from GfK, First Insight