Consumer confidence edges up despite “clouds on the horizon”
Consumer confidence has edged up in August as people feel more optimistic about their personal finances following the recent cut in interest rates by the Bank of England.
GfK’s long-running Consumer Confidence Index has increased by two points to -17 in the month.
The index measuring expectations for personal finances over the next 12 months is up three points at +5; this is one point down on this time last year.
GfK’s major purchase index is also up, rising by two points to -13.
Subscribe to TRBNeil Bellamy, consumer insights director at GfK, an NIQ Company, said: “The biggest changes in August are in confidence in personal finances, with the scores looking back and ahead a year each up by three points.
“This is likely due to the Bank of England’s August 7th cut in interest rates, delivering the lowest cost of borrowing for more than two years.”
However, the measure for expectations for the general economic situation over the next 12 months has decreased by one point to -30; this is 15 points worse than a year ago.
Bellamy said: “The improved sentiment on personal finances is welcome, but there are many clouds on the horizon in the form of inflation – the highest since January 2024 – and rising unemployment.
“There’s no shortage of speculation, too, about what the autumn Budget will bring in terms of tax rises. While August’s overall index score of -17 is the best this year, consumer confidence continues to move in a very narrow band, and there’s no sense that it is about to break out into fresher, more optimistic territory.
“The UK’s consumers are still in wait-and-see mode, and any surprises could result in sudden and sharp changes in sentiment.”
