By Claire West

GfK’s UK Consumer Confidence Index has increased by three points this month to -13

Measures for personal financial situation over the last 12 months and over the next 12 months both stay the same this month. Measures for general economic situation of the country over the last 12 months and over the next 12 months, and the major purchase index all see increases in August.

Nick Moon, Managing Director of Social Research at GfK, comments:

“As more and more official figures show that we are all worse off, with UK living standards at their lowest for a decade, the British public’s economic confidence continues to grow strongly — a conundrum of Alice in Wonderland proportions.

This month the Barometer rose by three points, following a five point rise last month and now stands at -13. This is its highest level since October 2009. The index has risen by 14 points in the last four months — the first time in three decades (1982) it has risen so substantially in four months.

So how to explain this seeming paradox of confidence rising while real income falls? This month offers a possible partial explanation, with the elements relating to personal finances stable, while those relating to the country as a whole rising. However this is only a partial explanation, because in recent months the personal finance items have also been rising.

The explanation probably lies in the fact that there has been a steady flow of economic good news over the past few months showing the economy growing - however anaemically - and even the double dip recession revealed by revised ONS figures never to have existed. With these figures receiving far more prominence than reports about declining real incomes, it is perhaps not surprising that people react to all this good news by declaring themselves more optimistic.”

UK Consumer Confidence Measures — August 2013

The overall index score has increased by three points this month to -13. Three of the five measures saw increases this month, and the remaining two measures stayed the same. The annual moving average drops one point to -24.

Personal Financial Situation

The Index measuring changes in personal finances during the last 12 months has stayed the same this month at -16; this is five points higher than August 2012.

The forecast for personal finances over the next 12 months has stayed the same this month at 0; this is 10 points higher than this time last year.

General Economic Situation

The measure for the general economic situation of the country during the last 12 months has increased six points to -29; this is 26 points higher than August 2012.

An expectation for the general economic situation over the next 12 months has increased eight points this month to -1; this is 26 points higher than this time last year.

Climate for Major Purchases

The major purchases measure has increased five points this month
to -16; this is 15 points higher than this time last year.

Savings Index

The ‘now is a good time to save’ Index has stayed the same this month at
-14, which is one point lower than August 2012.