GfK’s headline consumer confidence score declined by one point this month, thanks to cost of living pressures and the prospect of rising taxes.
Consumer confidence has fallen again in July, after moderate improvement last month, as people anticipate possible tax rises and worsening inflation.
This is according to GfK’s Consumer Confidence Barometer, which shows a one-point decrease in the headline figure. The overall index score remains firmly in the negatives at -19, and far lower than July 2024, when it sat at -13.
Consumer confidence has fallen again in July, after moderate improvement last month, as people anticipate possible tax rises and worsening inflation.
This is according to GfK’s Consumer Confidence Barometer, which shows a one-point decrease in the headline figure. The overall index score remains firmly in the negatives at -19, and far lower than July 2024, when it sat at -13.
The only individual measure within the index that saw any improvement this month is the major purchase index, which indicates people’s likelihood to buy big-ticket items. It improved by one point to -15.
Both consumers’ views of their personal finances over the last 12 months and for the coming year have remained the same as last month, at -7 and 2, respectively.
The main driver in the overall decline in consumer confidence has therefore been the global economic situation. People’s view of the global economic situation over the past 12 months (-44) and the year ahead (-29) have both decreased by one point compared to June.
However, the fall compared to last year is more significant. In July 2024, consumers’ view of the global economy over the previous year was 12 points lower at -32, while the figure for the year ahead was 18 points lower at -11.
The savings index, something commented on but not included in the overall index, is up by seven points, which is a marked improvement. It currently sits at 34, while this time last year it was 27, the highest for close to 20 years.
Given consumer confidence is “in the doldrums” and people are in a “cautious wait-and-see mood”, confidence could “easily” drop lower, according to GfK consumer insights director Neil Bellamy. He says marketers should respond by focusing on value, pricing, innovation and differentiation in order to reassure risk-averse consumers.
“It is more important than ever to show people the value of products,” he tells Marketing Week. “Value is multifaceted, with consumers increasingly wanting to buy products that are made in their country, especially in the current protectionist climate.”
He adds that innovation and differentiation are also “key” at this time, and underlines the importance of a solid pricing strategy.
“Pricing is crucial, as always, requiring that difficult balance between being competitive, protecting margins and maintaining brand imagery. Messages regarding features and quality also play a major role as people want reassurance they are spending wisely,” he explains.
“As any experienced marketer knows, these times of flat consumer confidence are precisely when we need to use all the tools in the marketing toolbox. Hard work today will deliver results tomorrow.”
