Consumer confidence reaches highest point in two years as optimism strengthens

Consumer confidence has reached its highest level in two years as optimism for the coming 12 months strengthens, according to a long-running survey.

GfK’s Consumer Confidence Index rose by three points to minus 19 this month – its best headline score since January 2022.

Confidence in personal finances gained two points and now stands at zero, ending 24 consecutive months of negative scores and “the best single indicator for how the nation’s households feel about their income and expenditure”, GfK said.

Expectations for the general economic situation over the next year have increased by four points to minus 21 – 33 points higher than last January.

Meanwhile, the major purchase index, a measure of confidence in buying big ticket items, is up three points to minus 20 – 20 points higher than a year ago.

Joe Staton, client strategy director at GfK, said: “Consumer confidence has started the year well with all measures up and a headline score of minus 19, the best since January 2022.

“Despite the cost-of-living crisis still impacting many households across the UK, consumers appear to be encouraged by the positive news about falling inflation.

“On balance, while there is national and global turmoil, the Consumer Confidence Index has started 2024 on a positive note – let’s see if this optimism continues.”

Linda Ellett, the UK head of consumer, retail and leisure markets for KPMG, said: “While inflation and interest rates are gradually reducing, prices are still increasing and consumers are seeing costs still going up.

“Many people still face the prospect of large jumps in their mortgage when their fixed deal ends this year. And even more face higher costs for the likes of insurance premium renewals, or in-contract increases for mobile and broadband provision.

“Household spending power is still gradually being eroded and in this environment it is little surprise to see that there is limited appetite for spending dwindling savings on major purchases, except perhaps – for those who can afford to – to temporarily take a break from it all on holiday.

“In KPMG research, households feeling worse about their financial security outnumber those feeling more secure by almost two to one.”