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UK consumer confidence makes surprise rebound amid cost of living crisis

Shoppers with yellow Selfridges shopping bags out on Oxford Street on 9th January 2023 in London, United Kingdom. Oxford Street is a major retail centre in the West End of the capital and is Europes busiest shopping street with around half a million daily visitors to its approximately 300 shops, the majority of which are fashion and high street clothing stores. (photo by Mike Kemp/In Pictures via Getty Images)
GfK’s consumer confidence index rose by a significant seven points in February. Photo: Mike Kemp/In Pictures via Getty (Mike Kemp via Getty Images)

Consumer confidence has bounced back from historic lows in February despite the ongoing cost of living crisis.

GfK’s consumer confidence index rose by seven points in February, although the headline score remains at a “severely depressed” -38.

All measures were up, from confidence in the general economic to confidence in personal finances.

The major purchase index, an indicator of confidence in buying big ticket items, was up three points to -37.

Joe Staton, client strategy director at GfK, said: “Despite widely reported headwinds of inflation continuing to outstrip wage rises, and the ongoing household challenge from the cost of living crisis, consumers have suddenly shown more optimism about the state of their personal finances and the general economic situation, especially for the coming year.

Read more: Over 600,000 UK households on benefits worse off until 2025

“While it’s too early to talk about ‘green shoots of recovery’, the uptick across all measures should be welcomed.”

He added: “The headline consumer confidence score is still severely depressed and the mood as well as the economy remains a long way off pre-lockdown levels, but a little consumer resilience might be what we need to soften any downturn in 2023.”

Linda Ellett, UK head of retail and leisure consumer markets for KPMG, said: “Household budgets are squeezed by higher prices, with energy, broadband and mobile phone costs set to rise for many households in April. Despite the uptick in consumer confidence, levels remain low overall.

Read more: More than six in 10 businesses planning on raising prices to cope with inflation

“With no end in sight to this higher cost landscape, many consumers continue to take steps to reduce spend where they can, switching where they shop, what they buy, whilst also cutting back on some activities, such as eating out and takeaways.

“Despite those steps, nearly half of consumers surveyed by KPMG say they are using savings to help meet their higher essential costs, whilst one in 10 are using credit more.”

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