Worried consumers still plan to spend big
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Consumer confidence continued to rise this month despite growing concern about personal finances, a closely watched survey shows.
It rose by two points to minus 36 on the monthly index by GfK, the market intelligence company. The biggest factor was a rise in the likelihood that people would buy big-ticket items such as furniture and electrical goods. This metric rose by four points to minus 33 according to the survey of 2,000 people aged 16 and over between March 1 and 14.
However, the overall growth masks a decline in consumer sentiment about personal finances, which fell by three points on the barometer to minus 21.
Finances have been squeezed not only by the cost of living crisis but also by rises in interest rates as the Bank of England races to contain inflation.
The headline inflation rate surprised forecasters by rising to 10.4 per cent in February, the latest figures show, up from 10.1 per cent in January. It is thought to have peaked at a 41-year high of 11.1 per cent in October, and had been falling until a surge in food prices last month. The Bank of England yesterday implemented its eleventh rise in interest rates since December 2021, taking them to 4.25 per cent, the highest since 2008.
Consumers’ perceptions improved after the UK avoided an early recession and the official forecaster improved its growth forecast to suggest that it would avoid a recession altogether. Confidence hit a record low last September when inflation was close to its peak.
Joe Staton, client strategy director at GfK, said: “A small improvement in the overall index score this month masks continuing concerns among consumers about their personal financial situation. This measure best reflects the financial pulse of the nation and it remains weak, with the figure for the coming year down three to minus 21 and an unchanged score for the past 12 months of minus 26.”
He added: “Forecasts that headline inflation will fall this year have proved premature, given Wednesday’s announcement of an unexpected increase. Wages are not keeping up with rising prices and the cost of living crisis remains a stark reality for most.”