UK Consumer Confidence Hits Two-Year High, Inflation Risk Lingers
GfK consumer confidence hits -14, beating forecasts. Major purchases sub-index at highest since December 2021. GfK warns inflation is back on the rise.
Alpha Score of 59 reflects moderate overall profile with strong momentum, weak value, weak quality, moderate sentiment.
British consumer confidence rose to its highest level in two years this month, even as the survey's publisher warned that inflation is creeping back. GfK's Consumer Confidence Index climbed to -14 in August from -17 in July, well above the -18 forecast in a Reuters poll of economists. The reading marks the strongest since August 2024.
The improvement was broad, with four of the survey's five sub-indexes rising over the month. The standout was the major purchases gauge, which hit its highest since December 2021. That measure tends to lead actual big-ticket spending more directly than the headline number, traders said. Personal financial confidence for the next 12 months rose to its highest since January, while expectations for the broader economy climbed to a two-year high.
Neil Bellamy, consumer insights director at GfK, struck a cautious note. He said inflation was back on the rise and that continued uncertainty in the Middle East and elsewhere still presented challenges likely to test UK consumers in the months ahead.
The GfK findings echo a wider pattern across UK sentiment surveys. Other gauges from YouGov/Cebr, BRC-Opinium, Barclays and LSEG/Ipsos have all recorded increases in consumer confidence over the past month, reducing the chance this is noise in a single dataset. GfK's index, which has tracked UK consumer sentiment since 1974, was based on interviews with 2,000 adults conducted between July 30 and August 12.
The upside surprise adds to a run of stronger-than-expected UK data and could feed into expectations for firmer household spending in the months ahead. For retailers and durable goods sectors, the jump in the major purchases sub-index is the most consequential detail, since that reading tends to predict actual spending more directly than the headline gauge. The improvement is corroborated by a cluster of other confidence surveys, including YouGov/Cebr, BRC-Opinium, Barclays and LSEG/Ipsos.
Still, GfK's own note that inflation is back on the rise, alongside ongoing Middle East uncertainty, is a reminder that the improvement in sentiment is occurring against a backdrop that could still reverse if price pressures build further.
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