11:45 am, August 10, 2022
Consumer confidence rose last month new data shows – possibly boosted the government’s cost-of-living payments.
July saw a two-point rise in the YouGov and the Centre for Economics and Business Research (CEBR) overall index brings an end to a seven month stretch of decline that began in December 2021.
Much of the index’s improvement can be explained by an uptick in household finance measures, said the survey, coinciding with July seeing the arrival of the first government cost-of-living payments for low-income households.
Despite the boost, the overall public mood around household finances remains downbeat – with the survey taken before the Bank of England announced that inflation was expected to hit 13 per cent this year.
Business activity also saw improvements, with employees slightly more likely to report that their workplaces are busier than they were last month and more likely to expect them to get busier in future.
Perceptions of job security among UK workers also inched up.
The only measure to see a decline was the retrospective home value measure, which deteriorated by 0.5 points. However homeowners are more optimistic than they were before after three months of worsening outlook.
Kay Neufeld, head of forecasting at CEBR, said: ‘The first increase in the Consumer Confidence Index since November 2021 provides a welcome reprieve after a torrid string of declines saw sentiment plummet by more than nine points over the past seven months.
‘Noticeably, the strongest upward momentum in July came from the backward and forward-looking household finance indicators.
‘Nevertheless, the increases in these measures are from an extremely low base and the outlook remains challenging. While the first cost-of-living payments have started to arrive, questions remain regarding the type of support households can expect over the coming months, with the energy price cap set to rise to new record highs in October and January next year.
‘Further headwinds will emerge as the UK economy is expected to teeter on the brink of recession in the second half of the year, suggesting the spike in consumer confidence may prove short-lived.’
Emma McInnes, global head of financial services at YouGov, said: ‘While this increase in consumer confidence is undoubtedly positive news, there is a long road back to regain ground lost over the past seven months of decline.
‘And, with the energy price cap rising in a few months alongside the UK economy heading towards a recession, there is every chance that this spike could be offset but a further long-term decline in the overall index.’
