Consumer confidence in the UK has improved for the second consecutive month, providing some hope to retailers that people will spend over the key Christmas trading period as households became less pessimistic about their future financial situation after the squeeze from high inflation, a survey showed on Friday (15).
GfK’s Consumer Confidence Index for December increased two points to -22, with all five measures up in comparison to last month’s announcement.
Consumer confidence has been volatile in recent months, reflecting contrasting factors in the wider economy. Inflation and high borrowing costs have put pressure on household budgets, but wage rises have also accelerated.
The index, which is not adjusted for seasonal variations, has shown a tendency to rise in December in recent years. All five of the survey’s components rose with the outlook for personal finances inching closer towards positive territory.
Joe Staton, Client Strategy Director at GfK, says, “Against the backdrop of flatlining economic growth, interest rates at a 15-year high, and price rises potentially eroding disposable income for years to come, the Consumer Confidence Index shows a modest improvement this month with gains across all key measures. Although the headline figure of -22 means the nation’s confidence is still firmly in negative territory, optimism for our personal finances for the next 12 months shows a notable recovery from the depressed -29 reported this time last year.
“Recovery in this number is important as it best reflects household financial optimism and control over personal budgets. Despite the severe cost-of-living crisis still impacting most households, this slow but persistent movement towards positive territory for the personal finance measure looking ahead is an encouraging sign for the year to come.”