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UK Consumer Confidence Reaches Highest Point in 2022

UK consumer confidence has surged to its highest level since early 2022, boosted by falling inflation and rising wages, according to recent research.

The GfK consumer sentiment indicator for September climbed to -21, marking the second consecutive monthly increase and the most positive reading since January last year, up from -25 in August.

Households’ expectations for their personal financial situations in the coming year also improved slightly, moving from -3 to -2. This contrasts with a reading of -40 a year ago when energy prices skyrocketed.

Meanwhile, data from the Office for National Statistics indicates that the UK’s high street is witnessing a boost in consumer confidence, with retail sales on the rise.

Joe Staton, GfK’s client strategy director, highlighted that while the uptick in the headline score is positive, many households are still grappling with the cost-of-living crisis, and economic conditions remain challenging.

Consumer price inflation dropped to 6.7% in August but remains above the Bank of England’s target, while separate ONS figures reveal a 0.4% increase in British retail sales in August, driven by food and clothing purchases.

Heather Bovill, deputy director for surveys and economic indicators at the ONS, noted that this rebound was led by physical stores, with internet sales partially offsetting the gains.

Economist Thomas Pugh at RSM UK expressed hope for consumer spending in the coming year as real wages rise, although he cautioned that many consumers might opt to save additional income due to lingering confidence concerns and rising housing costs.

In a surprise move, the Bank of England left interest rates unchanged at 5.25%, ending a series of increases expected by analysts. Pugh suggested that despite rising wages, many households may prioritize savings over spending due to ongoing economic uncertainties.


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