Consumer confidence dips... but shoppers 'still in the mood to spend'

Consumer confidence has dropped slightly amid declining optimism about the UK economy, but shoppers remain positive about spending while they can, a survey suggests.

A two-point drop in the GfK Consumer Confidence Index, carried out on behalf of the European Commission, has taken it to -3, but the results suggest that many shoppers think "now is the right time to spend".

Two of the measures used to calculate the index - personal finances and major purchases - saw increases in October, while the measure for the general economic situation over the next year decreased eight points to -17.

Joe Staton, head of market dynamics at GfK, said declining optimism about economic prospects for the wider UK economy had depressed the mood this month.

He said: "Despite the continuing feelgood factor arising from persistent low interest and inflation rates, sterling's sharp decline is arguably stoking fears that price rises will hit UK living standards hard next year.

"However, views on the state of our personal financial situation for the past year and next continue to remain positive when compared with 2015 levels, underlining that we feel more optimistic about situations we can control."

He added that the upward trend on spending intentions showed that "many consumers agree now is the right time for people to spend".

But he added: "So, with Black Friday approaching and Christmas trading already underway, will the remainder of 2016 see halcyon days for retailing? Are we gearing up to shop now and pay later amid concerns over rising high street prices?"

Meanwhile, the YouGov/Cebr Consumer Confidence Index also reported a stumble in the wake of Brexit talks and the currency slump, with household finance measures taking a particularly hard hit.

The index stands at 109.3, its lowest level since September 2013 with the exception of July's post-referendum slide.

Scott Corfe, director at the Centre for Economics and Business Research, said: "The flash crash in the pound and fears of a 'hard' Brexit have taken their toll on consumer confidence and 2017 looks set to be a challenging year for UK households.

"The decline in the value of sterling will push up the price of a wide range of imported goods - including food - next year.

"At the same time, earnings growth shows little sign of picking up meaning there will be a further squeeze on family finances in 2017."