According to a survey conducted by market research firm GfK, British consumer confidence has risen to its highest level in a year, despite persistent gloom over personal finances. The improvement in consumer confidence is due to the optimistic sentiment around the economy, as reported on Friday.
The GfK consumer confidence index rose to -36 in March, which is in line with the consensus in a Reuters poll of economists, and up from -38 in February. This is the highest reading since March 2022, indicating that the UK economy could sidestep a long-lasting downturn that had been predicted last year.
However, the survey also showed that there has been no improvement in the gauge of personal finances, which is linked most strongly to household expenditure. The report revealed that consumers are still concerned about their personal financial situation due to the wages not keeping up with the rising prices, and the cost-of-living crisis remaining a stark reality for most.
Joe Staton, Client Strategy Director at GfK, commented on the findings, saying “A small improvement in the overall index score this month masks continuing concerns among consumers about their personal financial situation. Wages are not keeping up with rising prices and the cost-of-living crisis remains a stark reality for most.”
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Moreover, consumer price inflation rose unexpectedly to 10.4% last month, and food and drink costs rose at the fastest rate since 1977, according to official data released earlier this week. This rise in inflation added to the strain on household budgets for many people.
On Thursday, the Bank of England raised interest rates by another quarter of a percentage point. This will add further pressure on households that are already struggling to make ends meet.
Despite the rise in consumer confidence, Joe Staton emphasized that “Just having enough money to live right and pay the bills remains the number one concern for consumers across the UK.”
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In conclusion, although British consumer confidence has reached a one-year high due to the optimistic sentiment around the economy, it is still being overshadowed by persistent financial gloom concerning personal finances. This is because wages are not keeping up with rising prices, and the cost-of-living crisis remains a stark reality for most households.