(Bloomberg) — UK consumer confidence rose to its highest level in almost two years as wage growth started to outstrip inflation, easing a cost-of-living crunch on household finances.
GfK Ltd. said its index of consumer sentiment increased 4 points to minus 21 in September. That was the strongest level since January 2022 just before the Russian invasion of Ukraine sent energy bills soaring. Economists had expected a small drop in confidence.
The closely-watched survey found that British consumers are becoming more optimistic about the economic outlook and their personal finances as the next general election comes into view. Britons are feeling far less pessimistic about the economy than they were a year ago shortly before Rishi Sunak became prime minister following Liz Truss’s disastrous stint in Number 10.
Joe Staton, client strategy director at GfK, said the latest improvement came “against the backdrop of falling inflation figures, growth in wages and high interest rates.”
“While this month’s improved headline score is good news, it’s important to note many households are still struggling with the cost-of-living crisis and that economic conditions are tough,” he said. “The reality is that consumer confidence remains suppressed, and the financial mood of the nation is still negative.”
GfK’s confidence indicators on the economic outlook, personal finances and making big ticket purchases rose, though all are still in negative territory.
Wage growth has nudged ahead of inflation and mortgage rates have declined after spiking in the summer. However, many households are only just feeling the squeeze from higher mortgage costs and recent growth indicators have deteriorated.