Consumer confidence edged above March 2020 levels in July

Consumer confidence edged above March 2020 pre-lockdown levels in July, according to GfK’s UK consumer confidence barometer.

The overall index score in July was -7, edging up from -9 in June. While this was still a negative score, indicating downbeat sentiment, it was a two-point improvement compared with March 2020.

Within the overall score, households’ forecasts for their personal finances over the next 12 months held steady compared with June with a score of 11. This was 11 points higher than July 2020, when the score was zero.

When households were asked how they expect the general economic situation to develop over the next 12 months, the score on this measure was -5, deteriorating by three points from -2 in June.

However, households were feeling slightly less negative about the general economic situation over the past 12 months in the latest survey.

Attitudes towards making major purchases also turned positive in July, from a score of -5 in June to two in July.

This major purchase measure within the index was a significant 28 points higher than a year ago.

Joe Staton, client strategy director at data researchers GfK said: “Consumer confidence edged ahead of its March 2020 pre-lockdown headline score by two points to -7 in July and has held firm or improved for six months in a row.

“Personal finance expectations for the next year remain strong and there’s a dramatic jump this month in our major purchase sub-measure with shoppers agreeing that now is the ‘right time to buy’.

“The healthy seven-point rise aligns with strong retail growth figures that reflect the gradual unlocking of the UK high street and release of pent-up demand as Brits hit shops, restaurants and venues.

“However, threats from increasing consumer price inflation, Covid variants and rising infection figures, the looming end of furlough and the Job Retention Scheme, could put the brakes on this rebound.

“Consumers are aware of these pressures judging from the latest fall, from -2 to -5, in how they view the general economy in the year ahead.

“What happens across the remaining summer months will frame consumer confidence for the rest of 2021 and beyond.”

Dr Cathrine Jansson-Boyd, associate professor in consumer psychology at Anglia Ruskin University, said: “Consumer confidence has clearly taken a hit and that is why it is taking so long for consumers to feel psychologically comfortable to return to pre-pandemic levels of spending.

“Whilst figures have been helped by the reopening of shops and restaurants, it’s still the case that many consumers remain concerned about shopping in person.

“At the same time, the lockdowns have made people more money aware, and many are enjoying seeing their savings grow since cutting down on their spending.”