UK Consumers Show Increased Optimism Amidst Improving Economic Conditions
British consumers are feeling more optimistic about the economy as inflation eases and wages continue to grow, according to a recent survey. The GfK consumer sentiment indicator rose to -21 in September, marking the highest level since January 2021. While this is positive news, it is important to note that many households are still facing financial challenges due to the ongoing cost-of-living crisis.
The survey, conducted by GfK, has been tracking consumer sentiment since 1974. While the current reading of -21 remains below the long-term average of -10, it is a significant improvement from the previous month’s figure of -25. Economists had initially predicted a further decline to -27, highlighting the unexpected upturn in consumer confidence.
Joe Staton, GfK’s client strategy director, emphasized that despite the improved headline score, many households are still struggling. The financial mood of the nation remains negative, indicating that consumer confidence is still suppressed. Staton also highlighted the ongoing challenges posed by the cost-of-living crisis and tough economic conditions.
The survey revealed that households have become more hopeful about their personal financial situation over the next year. The reading improved from -3 to -2, a notable increase compared to the alarming -40 recorded a year ago when energy prices skyrocketed. Additionally, views regarding the economy’s performance over the next 12 months saw a sharper improvement, with the gauge rising from -30 to -24.
The positive sentiment among consumers coincides with a decline in inflation. Consumer price inflation dropped to 6.7% in August, marking a significant decrease from the 41-year high of 11.1% reached in October 2022. However, it is important to note that inflation is still more than three times the Bank of England’s target, indicating that further progress is needed to stabilize the economy.
The Bank of England recently made the decision to pause its series of interest rate rises as the country’s economy experienced a slowdown. After implementing 14 consecutive hikes, the Bank Rate has been held at 5.25%. This decision reflects the need to carefully balance economic growth while considering the impacts of inflation and other external factors.
The GfK survey was conducted between September 1 and September 13 and included responses from 2,001 individuals. The findings provide valuable insights into the changing attitudes of UK consumers and their expectations for future economic conditions. While the increased optimism is a positive sign, it is clear that many households are still facing financial difficulties, and there is a need for continued support to address the cost-of-living crisis and create a more stable economic environment.
More detail via Daily Mail Online here… ( Image via Daily Mail Online )