Consumer confidence in the U.K. improved in September to the most optimistic level in more than a year and a half, a signal of improving prospects for the country’s economy and that pressures on household spending could be easing, according to a survey published Friday.
Confidence among British consumers rose four points to minus 21 this month, the highest reading since January 2022, according to an index compiled by consumer-research firm GfK.
The result flips a consensus of economists polled by FactSet, which expected the level to decline to minus 27, from minus 25 in August.
The increase in sentiment comes against the backdrop of falling inflation and growth in wages, said Joe Staton, client strategy director at GfK.
Headline inflation cooled unexpectedly to 6.7% in August from 6.8% in July. Meanwhile, total average wages in the three months to July accelerated to 8.5% on year.
Elsewhere, the Bank of England on Thursday held rates at 5.25%, a surprise move that will also help ease the squeeze on household spending. GfK’s survey was conducted between Sept. 1 and Sept. 13.
All five components measured in the survey–including respondents’ feelings about their personal financial situation and the wider economy for the past and next 12 months–were higher than in August.
Expectations for the economic situation over the next 12 months was the component that rose the highest, suggesting a rosier mood among Brits about the country’s economic prospects.
However, with the headline indicator still in negative figures, the reality is that consumer confidence remains suppressed, Staton said, adding that the financial mood of the nation continues to be negative.