UK consumer sentiment was stable in June but concerns about rising inflation appear to have undermined households’ confidence in the economic outlook, a survey showed.
GfK’s UK consumer confidence index was unchanged at -9 in June and four of the index’s measures improved from a month earlier.
People’s view of their financial situation over the past 12 months improved to zero from -4 and the personal financial outlook edged up one point to 11. Views on the economic situation over the past year and whether to make a large purchase also improved slightly.
The biggest change was in household’s view of the general economic situation over the next 12 months, which dipped to -2 from +4 in a month. The score was still 46 points higher than June 2020.
Joe Staton, GfK’s client strategy director, said: “The upwards trajectory for the index since the dark days at the start of the pandemic is currently still on track. However, 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.”
On Thursday the Bank of England said it expected inflation to rise above 3%, exceeding its 2% target, as the economy rebounds from the worst of the pandemic. The central bank said it expects that rate of price rises to be “transitory” but some commentators, including former BoE governor Mervyn King, think the threat of inflation becoming entrenched is greater than that.
“On a more positive note, we have strong numbers for our personal financial situation, both for the past year and the year to come,” Staton said. “This month’s further improvement in the major purchase index – the third month in a row – could see shoppers spending in anticipation of a staycation summer.”
