Big falls in consumer confidence masked by rush to buy big-ticket items before VAT rise, survey shows
Consumer confidence remained static in December but came close to hitting its lowest level in more than a year, according to data published today.
The monthly GfK NOP consumer confidence index stayed the same at -21, two points lower than this time last year but buoyed by households making major retail purchases in the run-up to Christmas and before the rise in VAT. But every other key measure decreased, meaning the overall score masked big falls in consumer confidence across most areas.
Confidence in consumers' personal financial situations over the past 12 months dropped, as did confidence in their situation over the next 12 months; confidence in the "general economy" over the past 12 months and over the next 12 months also fell. The "now is a good time to save" measure also decreased.
Nick Moon, managing director of GfK NOP Social Research, said: "At the moment consumer confidence is being propped up by one thing: a belief that the run-up to Christmas and the VAT hike is a good time for big-ticket retail purchases. This element of the index has distorted the overall index to make it appear static when in fact it is teetering on the brink.
"Every other [confidence] measure has fallen and without this one positive, consumer confidence would have fallen to its lowest level in over a year. Of course, the real test will come in January when festive spending ceases and the VAT increase comes in. Then we will finally see the full impact of how consumers are reacting to the first wave of austerity measures."
VAT is due to increase from 17.5% to 20% on January 4. However, consumers do not have to pay VAT on items including most food, baby wear, children's clothing and footwear, books, newspapers, magazines, water supplied to homes, donated goods sold in charity shops and caravans (depending on their size).
According to the latest IMRG Capgemini e-retail sales index, also published today, consumers spent �6.4bn online during November, equivalent to �104 a person. IMRG said the struggling economy was responsible for driving shoppers away from the high street in search of online bargains, while it agreed the VAT rise had also spurred shoppers to buy sooner rather than later.
Tina Spooner, director of information at IMRG, said: "It has been a very unique month ? the huge rise in shopping combined with one of the heaviest snowfalls in recent years has proved challenging for many online retailers. It will be interesting to see how this will affect consumer confidence and whether it will result in a weaker than expected December."
Santander yesterday said that one in five Britons will use their savings to cover all or some of their Christmas spending this year, with the average person withdrawing �212.
Shola Ameobi Allied Irish Banks John Barnes Extradition David Beckham Spending review 2010
No comments:
Post a Comment