A combination of rising wages and house prices, low unemployment and stable inflation helped boost consumer confidence by two points in February to -7, marking the third monthly increase in a row.
The rise in GfK’s overall index score is driven by consumers’s increasingly positive view on the state of the UK’s general economy for both the past and the next 12 months.
The measure for the general economic situation of the country during the past 12 months has increased five points this month to -23 (10 points higher than in February 2019). Expectations for the general economic situation over the next 12 months have increased three points to -21 (17 points higher than February 2019).
The index measuring changes in personal finances during the past 12 months, however, has decreased by two points to -1 (one point lower than February 2019), while the forecast for personal finances over the next 12 months is unchanged at six (five points higher than February 2019).
Despite the fact that consumers have shown some concern about their day-to-day personal finances, a five-point jump in the major purchase index to six reflects the recent rebound in retail sales.
The savings index, meanwhile, has remained the same this month at +20 (two points higher than at this time last year).
“There’s a strong sense of a change in the consumer mood in this month’s consumer confidence index,” says GfK’s client strategy director, Joe Staton.
“The key development is how positively consumers are viewing the economy over the past year and the coming year. The intention to make major purchases such as furniture or electrical goods has also jumped by a lively five points.”
There has not been a sequence of three improving monthly scores in a row since 2014.
“It’s good news in that respect,” Staton says. “But we now have the potentially major hurdle of the coronavirus outbreak.
“The fact is that nobody can say for sure what Covid-19’s full impact will be on the UK in terms of business and economic performance in the coming months. But it will be an issue for some time and this new note of uncertainty could easily hold consumer confidence back.”