Why the UK consumer confidence index rose in February

4 min read | February 19, 2021 09:13 PM AEDT | By Kunal Sawhney

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Why the UK consumer confidence index rose in February

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Summary

GfK’s survey result shows the consumer confidence index in the UK rose to -23 in February.

The index reveals the consumers’ confidence got boosted by the vaccine rollout programme.

The Growth for Knowledge (GfK) has found that the UK consumer confidence index has risen to -23 in February, indicating a five-point increase. In January, the index was at -28.

The British consumers seemed to be the more confident since the lockdown restrictions were put in place in March 2020. The consumer spending among Brits has rebounded strongly, despite the third lockdown in place and the rising level of unemployment giving jitters to the overall economic condition. However, the Consumer Confidence Barometer (CCB) remains 16 points below its February 2020 levels.

The positive movement of the consumer confidence index comes mainly from the 14-point increase in the general economic situation over the next 12 months. The survey was conducted in the first half of February amid speculations that Prime Minister Boris Johnson could lift the third social restrictions after 15 million people in the UK were vaccinated with the initial dosage of the Covid-19 vaccine.

Joe Staton, the client strategy director at GfK, said that it was encouraging to witness the rise in the index after the cold spell in the opening days of February. He also advised that any hopes of recovery in consumer confidence numbers over the coming period heavily depends on how the government continues to handle the vaccination programme and gradual lifting of social restrictions.

(Data Source: GfK)

Let’s dive deep and analyze the movement of the different measures of the index:

Personal Financial Situation over the last 12 months: The personal finances in last 12 months remained unchanged at -8 in February.

Personal Financial Situation over the next 12 months: The consumers’ confidence over the state of their personal finances over the next 12 months was boosted, with the index up two points to stand at 4.

General Economic Situation: The index recorded a 3-point rise in the consumer confidence relating to the economy over the next 12 months compared to last month, heading to -64 from -67 in January 2020. However, the figure remains 41 points lower than in the same month in the previous year.

General Economic Situation over the next 12 months: The UK’s general economic situation over the past 12 months surged the most by 14 points to -30 as the consumers gain confidence about the economy in 2021 with the rollout of vaccination program. However, it remains some 9 points lower on year-on-year basis.

Major Purchase Index: There comes a five-points increase in the major purchase index compared to the previous month, recording a value of -19.

Savings Index- GfK’s savings index jumped by one point from 18 to 19 for February, remaining just point lower than the same period in the previous year.

(Data Source: GfK)

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