UK consumers turn more confident despite inflation pain – GfK

People shop on Oxford Street in London April 10, 2023. REUTERS/Anna Gordon/File photo

LONDON  – British consumer confidence has risen for the fourth month in a row to its highest in 15 months as households take a more positive view about the economy and their finances, despite inflation still in double digits, a survey showed on Friday.

Market research firm GfK’s headline confidence index rose to -27 in May from -30 in April, moving further away from the -49 record low last September when former prime minister Liz Truss’s “mini-budget” showed chaos in financial markets.

May’s rise took the index to its highest since February 2022 and matched most forecasts in a Reuters poll of economists.

Households have been grappling with high inflation which was running at 10.1% in March with the cost of food and drinks surging by the most since 1977.

But GfK said all measures of consumer sentiment edged up compared to the previous month.

“The overall trajectory this year is positive and might reflect a stronger underlying financial picture across the UK than many would think,” Joe Staton, GfK’s client strategy director said.

“But everybody must hold on tight as it could still be a rocky ride out of these tough times.”

Prime Minister Rishi Sunak told reporters this week that economic optimism was up and household incomes were “outperforming”, drawing criticism from the opposition Labor Party which accused him of being out of touch ahead of a national election expected next year.

Britain has so far avoided forecasts of a recession and GfK’s measure of how consumers view the economy over the next 12 months rose to -30 from -34 in April while feelings about their personal finances increased by five points to -8.

Britain’s high inflation rate has prompted the Bank of England to lift borrowing costs at 12 meetings in a row since late 2021, pushing Bank Rate to 4.5 percent, the highest since 2008.

GfK’s sub-index of shoppers’ willingness to make expensive purchases also rose while its gauge of savings intentions was unchanged from the previous month.

The survey of 2,000 people was conducted between May 3 and May 12.

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