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Consumer confidence remained unchanged in August, a closely watched survey suggested, despite a deterioration in households’ expectations for the broader economy.
GfK’s overall consumer confidence index remained at -13 with an improving picture on the personal finance side helping to offset worsening confidence in the economy as a whole.
This meant overall consumer confidence remained at its highest level since September 2021.
Consumers’ expectations for their personal situation in the year ahead improved by three points in August.
Joe Staton, client strategy director at GfK, said the more positive outlook may be due to “a mortgage-friendly interest rate cut at the beginning of August – and hopes of more to come”.
The Bank of England cut interest rates for the first time since the pandemic earlier this month.
Markets expect at least one more rate reduction this year which will help to ease the cost on borrowers further.
The major purchase index, which assesses the likelihood that consumers will splash the cash on big-ticket items, also increased by three points. Staton said this was “great news” for retailers.
However, sentiment about the economic outlook over the next year fell by four points to -15. This was the first time since February that expectations for the economy had deteriorated.
The worsening in consumers’ confidence in the economic outlook came even after new figures out last week showed that the UK grew 0.6 per cent in the second quarter, continuing its strong start to the year.
Despite the slight decline in hopes about the economy, the numbers were still significantly more optimistic than a year earlier. Last August, sentiment about the economic outlook stood at -30.
“All the key numbers this month are significantly more encouraging than 12 and 24 months ago,” Staton said.
“But as we move into autumn and winter, how much further will this slow improvement in the mood of the nation run?”