Consumer confidence rises in February but cost-of-living crisis ‘far from over’
Brits’ confidence rose in February, fueled by better personal finances and a brighter outlook on the general economy.
However, confidence remained down on last year.
GfK’s index measuring changes in personal finances during the last year rose three points to -7, seven points better than February 2024.
The major purchase Index rose three points to -17; eight points better than February 2024, while expectations for the general economic situation over the next 12 months improved three points to -31.
“The biggest improvement is in how consumers see their personal finances for the coming year,” Neil Bellamy, Consumer Insights Director at NIQ GfK, said, adding that the Bank of England base rate cute will have “brightened the mood for some people.”
Inflation may be a drag on consumer confidence, with average prices unexpectedly rising three per cent in January.
“The majority [of Brits] are still struggling with a cost-of-living crisis that is far from over,” Bellamy said. “Prices are still rising above the Bank of England’s target; gas and electricity bills remain a challenge for many households.”
Consumer views on the general economic situation remained lower than 12 months ago, according to GfK, suggesting that people “don’t expect the economy to show any dramatic signs of improvement soon,” he added.
While retail sales rose in January, analysts attributed the boost to a rise in bargain-hunting rather than higher disposable incomes.
Equity analyst at Shore Capital, Clive Black, said that prospects for the UK consumer economy were “more mellow” due to still-low consumer confidence and demand.
Black added that “decelerating UK economic activity and over high base rates plus a deteriorating jobs market” were further causes for concern.
“Politicians looking for bright spots on the horizon will be disappointed,” Bellamy said.