UK household confidence shot up to its highest level since the war in Ukraine sent living costs soaring after a “sudden flowering of optimism” over the health of the economy and personal finances.
(Bloomberg) — UK household confidence shot up to its highest level since the war in Ukraine sent living costs soaring after a “sudden flowering of optimism” over the health of the economy and personal finances.
GfK’s consumer confidence index rose six points to minus 30 in April, a 14-month high and the third consecutive improvement. It showed consumers are becoming far more upbeat about the economy’s prospects over the next 12 months, making big ticket purchases and the future state of their own finances.
Figures were stronger than the reading of minus 35 that economists had expected and add to evidence that households are holding up against double-digit inflation. Wage growth and inflation both beat expectations, signaling both that the economy is more healthy than thought and that the Bank of England may have further work to prevent an prices from spiraling upwards.
“There’s a sudden flowering of optimism with big improvements across the board,” Joe Staton at GfK said in a statement Friday. “The eight-point jump in how we see prospects for our personal financial situation is a dramatic change that might suggest household finances are stronger than we thought.”
The cost-of-living crisis pushed the index to a record low last year but confidence has improved in six of the last seven months. Retail sales and GDP data have also beaten economists’ expectations in recent months and the UK could escape a recession once predicted by most forecasters.
“Consumer confidence continues to climb but still has an upward path ahead to recovery,” said Linda Ellett, UK head of consumer markets for retail and leisure at KPMG. “Confidence continues to be challenged by inflation and interest rates remaining elevated, while many households also face increases in their energy, mobile and broadband costs from this month.”
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