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21st July 2017
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News that UK consumer confidence has dropped to its lowest level for 22 months does not make for a good end to the week, does it? Particularly when you're involved in an industry such as this where the purchase of a new kitchen, bathroom or bedroom is not generally seen as a necessity and is likely to be delayed until everyone feels a little more optimistic about the future!
In case you're wondering what I'm talking about, the GfK NOP Consumer Confidence Index, released today, has dropped eight points this month to -29, the lowest figure since March 2009, when it was -30. Worryingly, this is 12 points lower than this time last year.
According to the figures, January saw decreases across all five measures; unfortunately for the KBB industry though, the most notable was in the 'major purchase' index, which dropped 22 points to -29. This is 13 points lower than this time last year.
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 index measuring changes in personal finances during the last 12 months has decreased two points this month, at -18; this is four points lower than this time last year. It could get worse though: the forecast for personal finances over the next 12 months decreased four points to -12; this is 16 points lower than January 2010.
The measure for the general economic situation of the country during the last 12 months has decreased by three points to -54; three points higher than this time last year. An expectation for the general economic situation over the next 12 months has decreased by seven points to -30, which is 28 points lower than January 2010.
The 'now is a good time to save' Index, has increased five points to -5, three points lower than January 2010.
Speaking about the results of the research, which was carried out on behalf of the European Commission, Nick Moon, managing director of GfK NOP Social Research, says:
"January's eight point drop represents an astonishing collapse in consumer confidence. 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."
While it's possible that these figures represent a post-Christmas blip, it's extremely unlikely that - even if there's a rally in February - this massive drop can be reversed.
And sadly, when combined with the bleak economic forecast, this will make talk of a double dip recession unavoidable...
That is the last thing we need as it will only add to the feeling of doom and gloom and persuade consumers that it will be prudent to leave their money in the bank, rather than have a splurge on something fabulous for the home.
28th January 2011