UK consumer confidence improves to strongest in 17 months
UK consumer confidence improved more than expected, reaching its strongest level in 17 months despite elevated inflation and soaring interest rates.
The market research firm GfK said its measure of sentiment rose 3 points to minus 24 in June. Economists had expected a reading of minus 26.
The figures indicate households are so far are weathering the worst cost-of-living crisis in generations. They mark a sharp contrast with investor bets that the Bank of England (BOE) will drive borrowing costs higher through the summer in an effort to tame stubbornly high inflation.
That would push mortgage rates into painful territory and potentially trigger a recession. On Thursday (Jun 22), the BOE stepped up its fight against inflation by raising interest rates by a larger-than-expected 50 basis points to 5 per cent, the highest level in 13 years.
“Consumers are showing remarkable resilience in the face of inflation that is currently refusing to yield,” Joe Staton, director of client strategy for GfK, said in a statement on Friday. “If consumers continue to weather the current economic storm, then this will provide a firm foundation for getting back to growth.”
Staton said the “most telling finding” is an index measuring the outlook for personal finances, which showed a “healthy” 7 point increase and is now near positive territory for the first time since December 2021.
Expectations for the general economic situation in the next rose by 5 points to minus 25 – which is 32 points higher than a year ago. BLOOMBERG
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