Confidence among British consumers showed an uptick in February, spurred by improvements in personal financial situations and a more positive perception of the general economy; however, there is still a shortfall when compared to the previous year.
The GfK index, which tracks changes in personal finances over the last twelve months, increased three points to -7, marking a seven-point improvement on February 2024, as reported by .
Furthermore, the major purchase index ascended three points to -17, eight points higher than in February 2024, whilst expectations for the general economic outlook over the next year elevated three points to -31.
Neil Bellamy, Consumer Insights Director at NIQ GfK, highlighted, "The biggest improvement is in how consumers see their personal finances for the coming year," citing that the cut to the Bank of England base rate might have "brightened the mood for some people."
Despite the more upbeat sentiment, inflation continues to exert pressure on confidence levels, with average prices witnessing an unforeseen three percent increment in January.
"The majority [of Brits] are still struggling with a cost-of-living crisis that is far from over," Bellamy advised, noting that price surges are outpacing the Bank of England's targets and that energy costs persist as a significant burden for numerous households.
GfK data indicated that consumer views on the general economic condition remain subdued compared to a year ago, implying limited expectations for any immediate significant economic recovery, as per Bellamy's insights.
Nevertheless, retail sales experienced a boost in January, but analysts attributed this growth to an increase in consumers seeking out deals rather than a genuine rise in disposable income.
Shore Capital's equity analyst, Clive Black, commented that the outlook for the º£½ÇÊÓƵ consumer economy is "more mellow", citing persistently low consumer confidence and demand as key factors. Black also noted that "decelerating º£½ÇÊÓƵ economic activity and over high base rates plus a deteriorating jobs market" are additional worries.
He further implied that politicians hoping for positive signals will not find much to be optimistic about, stating: "Politicians looking for bright spots on the horizon will be disappointed," Bellamy remarked.
