Consumer confidence has climbed to its highest level so far this year but remained fragile ahead of the upcoming autumn budget, according to a new report out this morning.
GfK’s long-running headline index increased by two points to –17 in August.
The move was driven by an improvement in personal finances scores, with the index monitoring changes during the past year and upcoming 12 months both rising by three points.
GfK said this was likely due to the Bank of England’s recent cut in the base interest rate to 4%, delivering the lowest cost of borrowing for more than two years.
The measure for the general economic situation of the country during the past 12 months is up two points to –42, while expectations for the next year fell one point to –30.
The major purchase index, which measures confidence in buying big-ticket items, is up two points to –13.
GfK added the improved sentiment on personal finances was welcome, but there were “many clouds on the horizon” in the form of inflation and rising unemployment.
Consumer insights director Neil Bellamy said: “There’s no shortage of speculation, too, about what the autumn budget will bring in terms of tax rises.
“While August’s overall index score of –17 is the best this year, consumer confidence continues to move in a very narrow band, and there’s no sense that it is about to break out into fresher, more optimistic territory.
“The UK’s consumers are still in wait-and-see mode, and any surprises could result in sudden and sharp changes in sentiment.”
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