Consumer Gloom as Christmas Loomed

Overall, the Consumer Confidence Index figure as compiled by Martin-Hamblin GfK in the UK fell by 6 points in December to stand at -4. This is the lowest index figure recorded since October 2001.

Four of the five key measures deteriorated, in particular the measure relating to the future of the general economic situation and also that assessing the benefits of making major purchases at the present time. Such a steep decline in confidence was last experienced between August and September of 2000. During this time, the overall index fell 6 points (from +1 to -5), mainly as a result of the fuel crisis that brought the UK to a standstill.

Perceptions of the development of personal finances over the last 12 months remained unchanged in December, registering a score of +5. This score is down 1 point on that attained at the same point in 2001. Expectations for the future of personal finances fell by 2 points during December to stand at +11. This is the lowest score since November 2001, when a score of +9 was recorded.

Perceptions of the development of the general economic situation dropped by 7 points in December to register a score of --28. In total, 51% of those questioned believe that the general economic situation has worsened over the past 12 months. This is the lowest score seen since October 1995, when the measure stood at -29.

Expectations for the future of the general economic situation fell dramatically in December. The measure currently registers a score of -22, having dropped by 12 points from the same time in November. The last time such a drastic decline was observed was from September 2001 to October in 2001, when the measure fell from -20 to -33 (largely as a result of the September 11th atrocities).

Perceptions of the benefits of making major purchases in the current climate also fell in December to register a score of +15, following a drop of 9 points. This is the lowest score achieved since October 2001 (when a score of +13 was recorded).

Overall, 45% of those questioned believe that the general economic situation will worsen over the next 12 months. Decenber's score of -22 is the lowest seen since November 2001 (when a score of -26 was recorded). The measure is also down 4 points year on year.

The measure gauging consumer confidence in the future of the general economic situation seems to be largely influenced by topical media reports. It is believed that increased speculation of a crash in the housing market, coupled with the very real threat of war with Iraq, have attributed to the sharp fall of confidence.

The measure gauging expectations of future unemployment levels increased by 8 points in December. An increase in this particular area denotes a negative shift in consumer sentiment - as it reflects an anticipated increase in unemployment. This measure currently registers a score of +26, with 54% of those questioned expecting unemployment to rise over the next 12 months. December's score of +26 is the highest seen since January 2002 (when a score of +27 was recorded). The measure is down 7 point's year on year.

The survey was conducted amongst a sample of 2002 individuals aged 16+ in December 2002. Quotas were imposed on age, sex, region, social class and income to ensure the final sample was representative of the UK population.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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