Consumer confidence resilient in June despite freedom day delay

Consumer confidence remained resilient despite a delay to a lifting of the remaining lockdown restrictions in the UK, a closely watched survey has revealed.

Data from GfK shows overall consumer confidence remained unchanged over the last month at minus nine in June 2021. But, this is up significantly from minus 30 in June last year.

Elevated household confidence levels is likely to have been caused by economic activity continuing to drive toward pre-pandemic levels and the success of the vaccination rollout.

Households’ outlook about their future financial position is trending higher. GfK’s Consumer Confidence Index shows forecasts for personal finances over the next 12 months rose one point to 11, swinging 15 points higher from minus four this time last year.

Joe Staton, client strategy director GfK, said: “A repetition of last month’s score doesn’t mean confidence is about to nose-dive.

“The upwards trajectory for the Index since the dark days at the start of the pandemic is currently still on track.”

Inflation poses threat to economic recovery

GfK’s index pointed to mounting concerns over whether rising inflation could dampen the UK’s economic recovery from the pandemic if higher prices result in consumers reining in spending.

The Bank of England held interest rates at a record low yesterday despite forecasting that CPI inflation will run above its target to reach three per cent.

Staton added “forecasts for rising retail price inflation could weaken consumer confidence quickly and that may account for the six-point dip in June in our measure for the wider economy in the coming year.”

Expectations for the general economic situation over the coming 12 months dropped to -2. However, this is still 46 points higher than in the same month last year.

Propensity to save continues to remain high despite the reopening of the UK high street, with the Savings Index standing at +1 in June, up points from last year.