Consumer confidence rises ahead of Black Friday as UK retail sales climb

Consumer confidence increased marginally in October as shoppers look to the Black Friday sales event – despite nervousness around the upcoming Budget, figures show.

GfK’s long-running Consumer Confidence Index increased by two points – although it still languishes at minus 17.

The increase was largely driven by a four-point rise in the index’s major purchase marker, an indicator of confidence in buying big-ticket items, to minus 12 – a nine-point improvement on last October.

Expectations for the general economic situation over the next 12 months also increased, by two points to minus 30, but marking a two-point decline on a year ago.

The forecast for personal finances over the next 12 months fell one point to positive three – five points better than this time last year.

Neil Bellamy, consumer insights director at GfK, said: "After several years of high inflation, savvy consumers have adapted their purchasing strategies to make the most of their money when discounts are most attractive.

"Where possible, many now delay major purchases until one of these sales events – and the biggest of all is Black Friday, on November 28.

"Both consumers and UK retailers will be watching closely to see whether the Chancellor’s Budget, to be announced just two days before Black Friday, boosts or dampens spending during that crucial weekend."

It comes as sales at UK retailers increased for the fourth consecutive month. The Office for National Statistics (ONS) said the total volume of retail sales is estimated to have risen by 0.5% in September.

The latest reading was a surprise increase after analysts predicted a decline of 0.2% for the month.

The figures are a positive signal in the face of concerns over a potential cooling in the UK economy.

It highlighted that retail sales volumes improved to their highest total level since July 2022, strengthened by online retailers.

Kien Tan, Senior Retail Adviser at PwC UK, said “shoppers still seem to be cautiously spending more” despite signs of pressure on consumer sentiment.

He added: "However, autumn showers also discouraged shoppers from visiting physical stores, as high street footfall fell and the proportion of sales online increased to 28%, which is the highest penetration of online retail since the end of the pandemic."

Matt Swannell, Chief eEonomic Adviser to the EY Item Club, added: "The underlying trend in the retail sector this year has been one of modest improvements, and this is likely to continue over the next 18 months.

"Weaker wage growth, sticky inflation, tighter fiscal policy, and the lagged impact of past interest rate rises for a substantial minority of mortgagors mean we expect real household disposable income growth to slow.

"However, consumer confidence has improved over the past year, and there appears to be scope for households to mitigate some of the impact of weaker real income growth by saving less."