Consumer confidence rose to its highest levels since the start of the Iran war, as Andy Burnham’s early moves on the cost of living left shoppers more willing to spend.
A return to cooler “shopping-friendly” temperatures over the next few weeks should also bring more families back to the high street, the BRC said in its latest BRC-Opinium sentiment tracker.
Optimism in the state of the economy over the next three months improved to –28 in August, up from –36 in July. Shoppers generally felt more secure in their financial situation, with their outlook rising to –9 in August compared to –12 in July.
Retailers look to benefit from that boost, with more shoppers intending to increase their retail spend over the next three months. Outlook jumped to +8 in August, from +1 in July. Outlook on personal spending overall also increased slightly, rising from +13 in July to +15 in August.
“Consumer sentiment continued to rise, with confidence in the economy hitting its highest level since the historical lows reached at the start of the Iran conflict,” said BRC CEO Helen Dickinson.
“Expectations for personal finances saw a small improvement, driven by an optimistic Gen Z. This same generation also reported a bump in spending plans, as the stifling summer heatwaves are expected to give way to more shopping-friendly temperatures in much of the country.”
Burnham’s golden opportunity
Since replacing Keir Starmer in No 10 in June, Burnham has announced a string of measures aimed at giving Brits “more room to breathe” during the cost of living crisis. It includes the removal of VAT from domestic energy bills, as well as plans to cap nationwide bus fares at £2.
He’s in the midst of a so-called summer “cost of living tour” around the UK ahead of October’s budget, and has promised more measures to help households struggling with everyday costs. However, retailers have slammed proposals to launch another probe into “rip-off” discounts and profiteering.
“The Burnham administration is enjoying a honeymoon boost driven by less pessimism about the outlook, but maintaining that momentum will depend on whether the government can ease the pressure on household budgets,” Dickinson said.
“Retailers compete fiercely to keep the cost of food and essentials down, yet mounting regulatory and tax burdens risk pushing prices higher,” she added, calling on the prime minster to ensure the upcoming budget supports retail businesses.
“The budget will be the acid test of this government’s real commitment to growth: if the government can reduce retail business costs, from energy bills to business rates, it will be ordinary households who feel the benefit. A budget that backs retail and reduces costs is a pro-consumer budget,” Dickinson said.
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