UK consumer confidence continued to recover in April, reaching its highest level since Russia launched its invasion of Ukraine in February 2022, according to data on Friday.
The GfK research group said its consumer confidence index, a closely watched indicator of how Britons view their personal and general finances economic perspectivesit rose six points to -30 this month.
The index plunged to record lows in 2022, as the Moscow offensive sent energy prices soaring and accelerated the increased cost of goodsputting pressure on domestic budgets.
Ashley Webb, UK economist at Capital Economics, said the rebound was due to “rapid growth in wages, due to a tight labor market and government aid supporting nominal household incomes.”
In its spring budget, the government said it would continue to subsidize household energy bills through its guaranteed price for an additional three months from April to June.
The GfK Index showed consumer confidence rising for the third straight month, beating the analyst consensus forecast of -35. However, it remained well below zero, indicating that most respondents were pessimistic about their personal finances and economic conditions in general.
“There is a sudden bloom of optimism with big improvements across the board,” said Joe Staton, GfK’s director of client strategy.
Households were less pessimistic about their financial situation over the next 12 months, and the sub-index for this measure jumped eight points to -13. Respondents, who were surveyed between April 3 and April 13, were also more willing to make large purchases at any time in the previous year.
But people’s appetite for big-ticket items “will depend on whether and when essential costs stabilize or fall,” said Linda Ellett, UK head of consumer, retail and leisure markets at KPMG.
“Confidence continues to be challenged by inflation and interest rates that remain high,” Ellett added.
United Kingdom inflation stood at 10.1% in Marchjust slightly down from 10.4 percent in February, according to the Office for National Statistics.
Food prices rose 19.1 percent in the year to March, putting pressure on household budgets and eroding people’s disposable income and ability to save.
The Bank of England is expected to raise interest rates beyond the current 4.25 percent when the Monetary Policy Committee meets again on May 11.