Confidence in the Economy Bolsters Consumer Sentiment

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Growing confidence in the economy has driven another boosted overall UK consumer confidence in June, reports GfK.

UK Consumer Confidence up three points in June to -14 reports GfK, purveyors of the UK's longest-running consumer confidence report. This was the third monthly increase since March and was driven by optimism about the UK economy.

"Strengthening real wage growth driven by falling inflation boosted consumer confidence again in June. That should keep the economy humming along this year," says Rob Wood, Chief UK Economist at Pantheon Macroeconomics.

GfK says consumers have a more "sympathetic" view of the economy for the last year and the 12 months to come.

Image courtesy of Pantheon Macroeconomics.

"Those measures on the economy registered sharp increases of seven points and six points respectively, and there was a welcome three-point boost in intentions to make major purchases," says Joe Stratton, Client Strategy Director at GfK.

While June’s reading of -14 is the third month in a row that confidence has increased, the headline score remains negative owing to the difficulties posed by the surge in inflation.

This week, it was reported that inflation has fallen back to the Bank of England's 2.0% target. Last week, wage growth was reported at 5.9% in April, which means real wages are growing strongly.

"We expect consumers’ confidence in their personal finances, and their spending, to keep rising as real wage growth improves," says Wood.

Consumer confidence has recovered significantly since the record low of -49 reached in September 2022.

"Consumers like financial certainty, and this has to be the cornerstone if we are to see confidence break out into positive territory," says Stratton.

Breakdown of the Consumer Confidence Survey:

Personal Financial Situation

The index measuring changes in personal finances during the last year is unchanged at -10; this is five points better than June 2023.

The forecast for personal finances over the next 12 months is down three points at +4, which is five points higher than this time last year.

General Economic Situation

The measure for the general economic situation of the country during the last 12 months is up seven points at -32; this is 22 points higher than in June 2023.

Expectations for the general economic situation over the next 12 months have increased by six points to -11; this is 14 points better than June 2023.

Major Purchase Index

The Major Purchase Index is up three points to -23; this is two points higher than this month last year.

Savings Index

The Savings Index has decreased five points to +22 in June; this is three points lower than this time last year.