Consumer confidence highest for a year
February 22, 2021
The UK consumer confidence index rose 5 points to an 11-month high of minus 23 in February, according to retail researchers at GfK published on Friday – a stronger result than most analysts had expected.
The data covers GfK's Major Purchases Index (MPI) which asked it this is the right time to buy big ticket items like flooring and furniture. The MPI is still at minus 19, but this is a a lot of progress from the dark days of April last year when the number was below minus 50.
A quick vaccines rollout and a brighter outlook for the economy are credited with the improvement in sentiment.
Joe Staton, GfK’s client strategy director, said the rise in consumers’ view of their personal financial situation was particularly encouraging, as this would feed through into spending and in turn “fuel the post-pandemic economy”.
But he was also careful to warn on the outlook: “We need to be cautious because the positive tailwinds of the vaccination roll-out are being met by the very strong headwinds of unemployment, the threat of inflation and the difficulty that many face in affording day-to-day living costs,” he said.
But recent bank data showing household deposits were up 10 per cent at the end of December compared with the same month last year does suggest there is a considerable pot of money that could flow into the economy if consumers are confident enough about their income to shrink their savings.
James Smith, economist at ING, said a lot would depend on consumer spending but he was in “little doubt” there was “pent-up demand waiting to be unleashed once the economy reopens on a sustained basis”.
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