UK Consumer Confidence on the Rise Following Slowdown in Inflation
Consumer confidence across households in the UK has seen an improvement this month, supported by a decrease in inflation, as indicated by new data. The S&P Global UK Consumer Sentiment Index survey has shown a positive trend, moving closer to the 37-month high it reached in July after a post-election boost.
The survey, which monitors consumer financial wellness, labour market conditions, household expenditures, savings, and debt, revealed a reading of 47.3 for October, up from 46.0 in September. Any reading above 50 is considered positive, demonstrating a negative sentiment below that threshold. Despite being slightly negative overall, this figure marks the second-highest reading in over three years, signalling a positive shift among consumers.
Data from a panel of 1,500 UK households collected between October 10 and 14 informed these findings. Economist Maryam Baluch from S&P Global Market Intelligence noted that consumer confidence appears to be recovering, following concerns around the Budget which dampened sentiment post-election.
Baluch highlighted the strong labour market as a key factor contributing to the improved confidence, with notable enhancements in both job security and employment income, among the fastest rates seen since data collection began in 2009. Furthermore, reduced worries about inflation, coupled with expectations of further interest rate cuts, have eased concerns regarding the cost of living.
Recent data from the Office for National Statistics showed that the UK Consumer Price Index (CPI) inflation dropped to 1.7% in September, the lowest level since April 2021. Surveyed households noted a further alleviation in financial strain this month due to softer inflationary pressures. Moreover, job security improved for the eighth consecutive month, while income from employment also witnessed growth.
The positive trends in consumer confidence following the inflation slowdown indicate a more optimistic outlook among UK households, suggesting potential improvements in overall economic sentiment moving forward.