Consumer confidence stable amid threat of inflation

The upward trajectory of consumer confidence remained steady in June amid warnings the threat of inflation could quickly weaken stability.

GfK’s long-running consumer confidence index stayed at minus nine this month despite a six-point drop in the measure for the wider economy in the coming year amid forecasts for rising retail price inflation.

However, confidence in personal finances, both for the last 12 months and the year ahead, remain strong, up four points and one point respectively on last month.

Source: GfK
Source: GfK

The major purchase index, an indicator of confidence in buying big ticket items, also improved for the third month in a row to minus five, 27 points higher than it was this time last year.

GfK client strategy director Joe Staton 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.

Source: GfK
Source: GfK

“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 a more positive note, we have strong numbers for our personal financial situation, both for the past year and the year to come. In addition, 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.”