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GfK wonders whether UK Major Purchase Index might signal something big

Staff Writer |
UK consumer confidence began 2017 on a marginally stronger footing, according to data from GfK, though there were indications of a potential slowdown in consumer spending.

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GfK's Consumer Confidence Index surprisingly increased to -5 from -7 in December, when the market had expected a worsening to -8.

January's improved figure, which was one point below its one-year average and just above its long-term average, was driven solely by improved positivity regarding households' personal financial situation.

Barclays said the improvement was likely to be short-lived "as due to the timing of the survey it does not account for PM Theresa May's speech on exiting the EEA and EU customs union or US President Trump's controversial executive orders".

Although consumers' perceptions of past and future personal financial situations improved, expectations for the general economic situation over the next 12 months remained flat at -23, having fallen 18 points since last January.

GfK wondered whether a two-point decrease in the Major Purchase Index to +10, which is six points lower than this time last year, might have wider implications.

"Is the decline in the Major Purchase Index this month a foretaste of slowing consumer spending throughout 2017?" said Joe Staton, head of market dynamics at GfK. "Rising inflation and weak income growth is forecast to squeeze households' disposable income, and these two factors could conspire to depress confidence for the year ahead. It's certainly difficult to see where the oomph will come from over the short term."

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