United Kingdom: Consumers become gloomier in April

The GfK NOP consumer confidence indicator fell from minus 6 points in March to minus 7 points in April. The index remains entrenched in negative territory, where it has been since April of last year, highlighting that consumers are still broadly pessimistic.

April’s figure reflects more pessimistic consumer sentiment regarding the economic situation over the last 12 months and for the year ahead. Consumers also grew less positive about their personal financial situation over the last 12 months and for the following 12 months, although they still remain generally upbeat. Despite rapidly rising inflation, consumers declared they were more likely to make major purchases in April. The deterioration of the overall indicator comes amid a period of great political turbulence, with the recent announcement of snap elections and the country about to initiate Brexit talks with the EU.

According to Joe Staton, Head of Market Dynamics at GfK, “Consumers continue to remain positive about the state of their personal finances and even report that now is a good time to buy. But is this too good to be true? Is this simply the calm before the storm? Is pre-Brexit economic turbulence yet to really batter households? That threat cannot be ruled out. But for the moment, consumer sentiment remains relatively buoyant as we enter our two-year window of renegotiation and navigate the run-up to the General Election.”

FocusEconomics Consensus Forecast panelists expect private consumption to expand 1.7% in 2017, which is unchanged over last month’s estimate. For 2018, the panel sees private consumption expanding 1.0%.