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Consumer confidence stalls but there is hope a return to normality is ‘not far away’

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Consumer confidence has stalled during March, but there are some signs of cautious optimism following the slight fall in inflation revealed by the Office of National Statistics yesterday – putting it at its lowest level in nearly two and a half years.

The overall index score, as measured by the latest GfK Consumer Confidence Barometer, puts it at -21, the same figure as February. It remains two points lower than in January 2024, but higher than the -36 recorded in March last year.

The data for March was collected from consumers prior to news of inflation falling, but Joe Staton, GfK’s client strategy director, says it has captured that “slowly growing sense of optimism” in the read-out for personal finances over the coming 12 months, which stands at 2. This is the first time the score has been positive for two years.

Consumers are also more positive in their views of their personal situation over the last 12 months, with the score increasing one point to -13.

“Following two months at a value of zero – leaving 24 consecutive months of negative scores behind – we now finally have a positive number of 2,” says Staton. “People are at last feeling better about their wallets – they know inflation is coming down, although not all of them are feeling the wider benefits. There’s a long way to go until we can say that confidence is back to where it should be.”

Confidence in the general economic situation over the next 12 months has also risen slightly, up one point to -23.

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People’s views of the general economic situation over the last 12 months has fallen by two points though to -45.

The Major Purchase Index, which represents consumers’ likelihood to buy big ticket items, has also dropped, falling two points to -27.

Meanwhile, the Savings Index has fallen by four points, but remains at a level of 25. This measure is not included in the headline consumer confidence calculation.

“We need to see a more forgiving read-out on how the economy has been doing and where it will go in the next 12 months. And a stronger score on major purchase intentions has to come through,” says Staton.

“Many people are still feeling the pain of cost of living pressures, but we have now come to a point where some can be persuaded that more normal times are not so far away. There may be setbacks as we move forward but seasoned marketers undoubtedly have the skillsets to navigate the new dynamics successfully.”

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