UK consumers are grappling with low confidence, leading to what is being called the “new abnormal.” According to consumer data company GfK, the consumer confidence index rating in October saw a slight increase of two points but remains near an all-time low of -47. The report highlights the uncertainty and turmoil faced by UK consumers.

Although some measures showed improvement compared to September, the overall report had many negative readings. The index measuring changes in personal finances over the last 12 months remained at a reading of -28, which is 23 points worse than October 2020. The forecast for personal finances over the next 12 months increased by six points to -34 but still remained significantly lower than the previous year. The measure for the general economic situation of the country over the last 12 months improved by three points to -69 but was still lower than last October. Expectations for the coming 12 months also improved by seven points to -61, but were still significantly lower than 12 months ago.

The major purchase index, which indicates consumers’ willingness to make big purchases, fell by three points to -41, a significant 31 points lower than the previous year. The savings index, typically rising in troubled times, saw a modest increase of two points to +13 but remained nine points lower than the previous year.

Joe Staton, Client Strategy Director at GfK, expressed concern about the persistently low consumer confidence levels. He pointed out the steep downward trend in the major purchase measure and emphasized the importance for businesses to strengthen their balance sheets in the final quarter of the year.

Staton highlighted that the biggest concern for consumers is inflation, which is currently growing at its fastest rate in four decades. With rising energy and food prices, the possibility of higher mortgage costs due to base rate rises, and the expected tax increases and austerity measures, UK households are facing a web of uncertainty and turmoil. This negative environment is likely to dampen future spending plans and potentially slow down the UK economy even further. Staton warned that consumers, like governments, can adjust their behavior, and the challenging economic conditions indicate a difficult winter ahead.

Useful links:

1. [GfK Consumer Confidence Index](https://www.gfk.com/en-gb)
2. [Impact of inflation on consumers](https://www.bbc.com/news/business-59161155)