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Economy

Consumer confidence drops for third straight month

The Major Purchase Index decreased by four points to -10 in October

Consumer confidence has dropped for the third straight month in October, down four points to -17, according to the latest GfK Consumer Confidence Index.

The long-running index found that all measures were down in comparison to September. It comes as the index measuring changes in personal finances over the last 12 months dropped one point to -5; this is four points better than October 2020.

The forecast for personal finances over the next 12 months has also decreased four points to +1; this is only one point higher than this time last year.

GfK said the measure for the general economic situation of the country during the last 12 months is also down three points at -46; however, this is 21 points higher than in October 2020.

Expectations for the general economic situation over the coming 12 months have fallen by ten points to -26; but this is still 24 points higher than October 2020.

In addition, the Major Purchase Index decreased by four points to -10 in October and the Savings Index stayed the same at +22 in October – eight points higher than this time last year.

Joe Staton, Client Strategy director GfK, 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. For two consecutive months five sub-measures have decreased and the headline score has dropped three months in a row.

“The sharpest concern is how consumers see the future economy with this collapsing ten points this month just as it did in September.”

He added: “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.”

 

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