UK consumer confidence improved in March on the back of better economic forecasts, but people’s financial outlook deteriorated, according to data released on Friday.
The Consumer Confidence Index, a closely watched measure of how people view their personal finances and the broader economic outlook, rose two points this month to -36, according to research group GfK. .
The number was the highest since March 2022 and was in line with analyst expectations, but it was still well below zero, indicating an overall decline in confidence.
Respondents to the survey, which was conducted March 1-14, were more optimistic about the year ahead, with a sub-index that measures their general outlook on future economic conditions rising three points to -40. bottom.
But Joe Staton, director of client strategy at GfK, said the overall improvement masked “continued concerns among consumers about their personal finances.”
Respondents’ personal finance expectations for next year fell by 3 percentage points to -21, pointing to the fact that ‘wages are not keeping up with rising prices’. cost of living crisis It remains a harsh reality for most people,” Staton said.
Overall, consumer confidence in March was 5 points lower than the same month in 2022, as higher energy prices, higher interest rates and food prices weighed on household budgets over the past year.
The GfK data was released after the National Bureau of Statistics confirmed Wednesday that consumer price inflation rose to 10.4% in February from 10.1% in January.
The unexpected rise in inflation has fueled concerns that price increases are increasingly driven by domestic pressures in the services sector, which tend to be more persistent than external shocks from higher energy prices.
“Having enough money to live right and pay the bills remains the number one concern for consumers across the UK,” Staton said.
Nevertheless, GfK noted that consumers reported a slight increase in their willingness to make expensive purchases and the likelihood of putting money into their savings accounts in March.
Ashley Webb, UK economist at research firm Capital Economics, said: “Households appear to be using pandemic savings to support real spending, even as high inflation reduces household real incomes. ‘ said. She added that the resilience of the labor market has also boosted consumer morale.
The survey will be conducted on the following day The Bank of England raised interest rates by 0.25 points. In response to high inflation, the central bank’s 11th consecutive rate hike since December 2021 was 4.25%.
Webb said a further rise in the base rate “is likely to weigh on consumer confidence, but we don’t expect interest rates to rise further from here.
“Instead, we expect easing inflation and the resulting increase in real household incomes to underpin consumer confidence this year.”
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