UK consumer confidence drops to lowest level for 22 months
Nick Moon, MD of GfK NOP Social Research, comments: "January's eight point drop represents an astonishing collapse in consumer confidence. In the 35 years since the Index began, confidence has only slumped this much in a single month on six occasions, the last being November to December 1994.
"The VAT increase is the first of the government's austerity measures that has had a widespread impact on consumers, and it seems to have hit people's economic confidence hard, especially as the biggest drop was in consumers' appetite for major purchases. With inflation on the up and the full force of the cuts yet to hit, these figures could be the beginning of a very painful period.
"There is a chance that these figures represent a post-Christmas blip, but even if there is a rally in February it is extremely unlikely that it will reverse this massive drop. Today's figures, when combined with the bleak economic forecast, will make talk of a double dip recession unavoidable."
UK consumer confidence measures - January 2011
The overall index score this month has dropped eight points to -29, 12 points lower than this time last year. All 5 measures decreased this month, the most notable decrease in the "major purchase index". The annual moving average drops 1 point to -19.
| Measure | Movement | January 2011 | December 2010 | January 2010 |
|---|---|---|---|---|
| Overall Index Score | down 8 | -29 | -21 | -17 |
| Personal financial situation over last 12 months | down 2 | -18 | -16 | -14 |
| Personal financial situation over next 12 months | down 4 | -12 | -8 | 4 |
| General economic situation over last 12 months | down 3 | -54 | -51 | -57 |
| General economic situation over next 12 months | down 7 | -30 | -23 | -2 |
| Climate for major purchases | down 22 | -29 | -7 | -16 |
Personal financial situation
The index measuring changes in personal finances during the last 12 months has decreased 2 points this month, at -18; this is 4 points lower than this time last year.
The forecast for personal finances over the next 12 months decreased 4 points to -12; this is 16 points lower than January '10.
General economic situation
The measure for the general economic situation of the country during the last 12 months has decreased by 3 points to -54; 3 points higher than this time last year.
An expectation for the general economic situation over the next 12 months has decreased by 7 points to -30: 28 points lower than January 2010.
Climate for major purchases
The major purchases measure has decreased by 22 points to -29; 13 points lower than this time last year.
Savings index
The 'now is a good time to save' index has increased 5 points to -5, which is 3 points lower than January 2010.
About the GfK NOP Consumer Confidence Survey
Research carried out by GfK NOP on behalf of the European Commission.
About GfK NOP
GfK NOP Ltd is part of the GfK Group and a leading market research agency in the UK and internationally. It is a renowned supplier of market information and insight, offering sector specialists and best-in-field research for qualitative, quantitative, ethnographic, omnibus and online research services.
Source: GfK
The GfK Association was established in 1934 as a non-profit organization for the promotion of market research. Its membership consists of approximately 600 companies and individuals. The purpose of the Association is to develop innovative research methods in close cooperation with academic institutions, to promote the training and further education of market researchers, to observe the structures and developments in society, the economy and politics that play a key role in private consumption, and to research their effects on consumers. Survey results are made available to the membership. The GfK Association is a shareholder in GfK SE.
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