U.K. consumers feeling brighter as year starts, with inflation trending down

U.K. consumers continue to feel cheerier as 2024 starts, according to a survey released Friday.

Research group GfK’s Consumer Confidence Barometer rose three points to minus-19, its highest level in two years. The reading was a little better than the minus-20 expected by economists, according to a poll carried out by the Wall Street Journal.

All components of the barometer rose over the month, including sentiment on the general economic situation ahead, and confidence on making major purchases. Particularly exciting is the measure of respondents’ feelings on their personal financial situation for the coming 12 months, GfK client strategy director Joe Staton said, with the index moving out of negative territory for the first time in two years.

“This significant change is the best single indicator for how the nation’s households feel about their income and expenditure,” Staton said.

“Despite the cost-of-living crisis still impacting many households across the U.K., consumers appear to be encouraged by the positive news about falling inflation,” Staton said. “Let’s see if this optimism continues.”

Consumer prices ticked a little higher in December, though economists expect the rate of inflation to resume its fall in the months ahead.

An increase in household spending would offer a much-needed boost to the U.K. economy as the year begins. Retail sales were weak for much of the latter part of 2023, including the key December period, and economists expect a tough start to 2024 for the wider economy.

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