Consumer confidence falls as Omicron and rising cost of living scare shoppers

Consumer confidence has slipped in the crucial run-up to Christmas as Omicron and the soaring cost of living threaten a depressing end to the year for retailers.

GfK’s long-running Consumer Confidence Index fell one point to minus 15 in December as shoppers signalled they were less inclined to make major purchases during the all-important countdown to Christmas.

The Major Purchase Index decreased by three points to minus 6, although it is 16 points higher than it was this month last year.

Both measures looking at confidence in the coming year have also slipped – down one point both for personal finances over the next 12 months and for the wider economy during 2022.

GfK said the fall was driven by concerns over the soaring cost of living with the prospect of looming interest rate rises piling on more pressure.

The measure for the general economic situation of the country during the last 12 months is one point up to reach minus 39, 26 points higher than in December 2020.

GfK client strategy director, Joe Staton, said: “News about the Omicron variant could not have arrived at a worse time for festive celebrations.

“As thoughts began turning to Christmas and the New Year, Omicron jumped out of nowhere and threatened to bring Santa’s sleigh crashing to a halt.

“While the holiday season has not yet been hijacked, December’s headline score has slipped one point to minus 15 and the lack of Yuletide cheer is evident.

“We end 2021 on a depressing note and it looks like it will be a bleak midwinter for UK consumer confidence possibly with new Covid curbs and little likelihood of any real uplift in the first months of 2022.”

Linda Ellett, head of consumer markets, leisure and retail at KPMG UK, said: “Our own figures showed retail sales increased by 5% in November, as consumers shopped for Christmas, snapped up Black Friday offers, and also brought a buzz to hospitality businesses.

“Since then, Covid economic uncertainty has once again increased, as has inflation. In this context, it’s little surprise to see the year ending with consumer confidence falling.

“Businesses will be hoping that the booster rollout lifts consumer confidence, and a desire to have a great Christmas keeps spending high.

“As we look to 2022, a feeling of financial and Covid assuredness is key to driving spending – including larger purchases by those who have managed to save during the pandemic, and much needed spending in pubs and restaurants.”