Consumer confidence in the UK rose to the highest level since January 2022 in September, providing some positive news for retailers heading towards the crucial Christmas trading period.
GfK’s Consumer Confidence Index increased four points to -21 in September, with all five measures up in comparison to last month’s announcement.
Joe Staton, Client Strategy Director GfK, commented, “The view on our personal financial situation for the past year and the next is registering marginal but welcome growth, while expectations for the UK’s wider economy in the coming year show a more robust six-point increase. And with less than 100 shopping days to Christmas, the four-point boost to the major purchase measure might offer some hope to retailers, who know all too well that many people face financial pressure in the run-up to this year’s festive season.”
However, he noted that while this month’s improved headline score is good news, many households are still struggling with the cost of living crisis and tough economic conditions.
“The reality is that consumer confidence remains suppressed, and the financial mood of the nation is still negative,” said Staton.
Economists noted that a relatively low unemployment rate, easing price rises, strong wage growth, and a correction in mortgage rates from their recent 15-year peak has helped support more robust consumer spending in recent weeks.
The Bank of England yesterday voted to hold interest rates at 5.25 per cent after 14 consecutive increases since December 2021, giving some hope to hard-pressed mortgage holders.
However, Alex Kerr, economist at consultancy Capital Economics, warned that “while the worst of the falls in real household disposable incomes are behind us, the full drag on activity from higher interest rates has yet to be felt”.