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UK's consumer confidence hit as Brits save more and spend less

·2-min read
People walking along a busy London shopping street
Consumer confidence remained above pre-pandemic levels, GfK said. Photo: Getty Images

Britons’ negative attitude towards making major purchases was a big reason for a slight fall in consumer confidence in August, new data revealed.

Data analytics company GfK’s UK consumer confidence index was -8 for August, dropping from -7 in July but above June’s -9.

Consumer confidence remained above pre-pandemic levels, according to GfK's index. 

While the overall index was still a negative score, it was one point ahead of March 2020 before the first national lockdown hit.

The major purchase index scored -3, down from a positive score of 2 in July but still much higher than the -25 scored this time last year.

Consumers were looking to savings instead, which scored 25 – up five points month on month.

“UK consumers have built their savings to record levels during COVID,” said Joe Staton, client strategy director at GfK.

Watch: Should I pay off debt or save money during the coronavirus pandemic?

Read more: Shop discounts keep inflation in check but BoE's price rise forecast still stands

He added that "against a backdrop of cooling headline inflation and soaring house prices, the UK consumer confidence index is stable".

The UK government recently announced house prices increased by 13.2% in the year to June 2021, up from 9.8% in May 2021.

And the annual rate of UK inflation slowed by more than expected last month, from 2.5% to 2%. But analysts across the board have noted the drop is merely a blip and that the pullback doesn't invalidate the Bank of England's forecast for inflation to hit 4% before 2022 – double its target rate.

Meanwhile, households’ forecasts for their personal finances over the next 12 months held steady compared with July with a score of 11. This was 10 points higher than August 2020, when the score was 1.

“With the economy continuing to open up and GDP bouncing back, the overall picture for the economic health of the nation is looking good for the remainder of 2021," said Staton.

When households were asked by GfK how they expect the economic situation to develop over the next 12 months, the score was -6, down by one point from -5 in July.

Watch: What is inflation and why is it important?

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