Consumer confidence slumps in Christmas runup

GfK’s consumer confidence index slips seven points as households hold out scant hope the economy will pick up soon

Consumer confidence slumped in the runup to Christmas as households held out little hope the economic situation would pickup anytime soon, according to a forecaster.

GfK’s consumer confidence index slipped seven points in December to -29, compared with a month ago.

In four of the five questions asked about the consumer’s personal financial situation or the general economy respondents were more downbeat than in November.

Consumers, for instance, thought the finances of their household had got worse over the last year and they expected the wider economy to get worse in the year ahead.

The only indicator which held steady was that consumers expected the financial situation in their own homes to remain broadly unchanged over the coming year.

Howard Archer of IHS Global Insight said the marked relapse in consumer confidence in December “is particularly worrying news for retailers given the importance of sales over Christmas, and it is also worrying for hopes that consumers can play a leading role in helping the economy develop sustainable growth.”

The survey fits into the overall picture of low consumer spending and confidence reports since the start of the financial crisis in 2008, despite the occasional blip fuelled by a public holiday or a special event like the Olympics.

Households are worried about job security, while many face below-inflation wage rises as well as rising energy bills.

GfK’s managing director of social research, Nick Moon, said: “While such a dramatic drop in consumer confidence over the last month might seem like very bad news, it must be seen in the context of a massive eight point rise in November – the seventh highest increase since the index began in 1974.”

He said November’s rise might have suggested a turning point, but this time, as on previous occasions, “the surge disappeared as fast as it arrived”.

Moon added: “Despite last month’s rise, the index is now only one point higher than it was in October, indicating consumer sentiment is still fragile despite the fact Christmas is less than a week away.”

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