UK consumer confidence stalls after months of positivity

Consumer confidence has stalled after months of positivity as stubborn inflation led households to limit their spending, figures suggest.

GfK’s long-running Consumer Confidence Index fell two points to minus 21 in February, although the forecast for personal finances over the next 12 months remained unchanged and is 18 points higher than this time last year.

The fall comes as households face a new round of rising essential costs, with inflation fuelling mid-contract price hikes for the likes of mobile and broadband and looming re-mortgaging.

Confidence in the general economy over the next 12 months fell by three points to minus 24, although this remains 19 points higher than a year ago.

The major purchase index, an indicator of confidence in buying big ticket items, is down five points to minus 25, 12 points higher than last February.

Joe Staton, Client Strategy Director at GfK, said: "There’s a mixture of bad news and good news for February. The bad news is that the improvement in the Overall Index Score seen over recent months stalled slightly in February due to a fall across most measures.

"However, the good news is that optimism for our personal financial situation for the next 12 months has not slipped back.

"This metric is key to understanding the financial mood of the nation because confident householders are more likely to spend despite the cost-of-living crisis.

"Looking forward, it will be interesting to see what the forthcoming Budget delivers in terms of taxation and inflation. These are important issues to everyone – especially in an election year."

Linda Ellett, UK Head of Consumer, Retail & Leisure Markets for KPMG, added: "Minimal sales growth on the high street or through digital channels indicates that consumer confidence levels continue to restrict spending.

"The reality for many households remains adapting spending to meet higher essential costs, with stubborn inflation further fuelling in-contract price rises for the likes of mobile and broadband.

"Many households also still face higher mortgage rates when their fixed-term deal ends this year – and while rates have fallen compared to what they were a few months ago, those consumers will still see a significant jump in their monthly payment compared to what they were paying.

"A lowering of energy prices is offering households some welcome news, and they are looking to the Budget and the Bank of England for more."