UK consumer confidence improves despite dip in personal finance outlook

UK shopper confidence improved in March on the again of higher financial forecasts, however individuals’s outlook on their very own funds worsened, based on knowledge revealed on Friday.

Analysis group GfK mentioned its index of shopper confidence, a carefully watched measure of how individuals view their private funds and wider financial prospects, had risen this month by two factors to -36.

The studying was the very best since March 2022 and in step with analyst forecasts, however it remained effectively under zero, indicating an total decline in confidence.

Respondents to the survey, which ran between March 1 and 14, have been extra optimistic concerning the 12 months forward, with the sub-index measuring their basic outlook on the longer term financial scenario growing by 3 factors to -40.

However Joe Staton, shopper technique director at GfK, mentioned the general enchancment masked “persevering with issues amongst customers about their private monetary scenario”.

Respondents’ forecast for his or her private funds within the subsequent 12 months fell three factors to -21, pointing to the truth that “wages should not maintaining with rising costs and the price of dwelling disaster stays a stark actuality for many”, mentioned Staton.

General, shopper confidence in March was 5 factors decrease than in the identical month in 2022, as hovering power payments, larger rates of interest and meals costs squeezed family budgets over the previous 12 months.

The GfK knowledge adopted affirmation on Wednesday from the Workplace for Nationwide Statistics that shopper worth inflation rose to 10.4 per cent in February, up from 10.1 per cent in January.

The surprising uptick in inflation has strengthened fears that worth rises are more and more being pushed by home pressures within the providers sector, which are typically extra persistent than the exterior shock of excessive power costs.

“Simply having sufficient cash to reside proper and pay the payments stays the primary concern for customers throughout the UK,” mentioned Staton.

However, GfK famous that buyers in March reported a slight uptick of their willingness to make costly purchases, in addition to within the chance that they might put cash into financial savings accounts.

Ashley Webb, UK economist at Capital Economics, a analysis firm, mentioned that “regardless that actual family incomes have been eroded as a result of excessive inflation, households seem to have supported their actual spending by utilizing their pandemic financial savings”. She added that resilience within the labour market had additionally lifted shopper morale.

The survey comes a day after the Financial institution of England raised rates of interest by 0.25 proportion factors to 4.25 per cent, marking the central financial institution’s eleventh consecutive enhance since December 2021 in response to excessive inflation.

Webb mentioned that whereas additional rises within the base charge have been “prone to weigh on shopper confidence, we don’t count on rates of interest to rise a lot farther from right here.

“As an alternative, we count on the easing in inflation and the resultant increase in actual family incomes will assist shopper confidence this 12 months.”

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