UK consumer confidence hits 14-month high but budget fears loom

British shopper sentiment rose in October to its joint-highest degree since August 2024, pushed by customers benefiting from promotional gross sales occasions from Amazon and different main retailers.

Market analysis firm GfK reported on Friday that its long-running shopper sentiment gauge rose to -17 in October

-20 was the anticipated from -19 in September.

The advance was largely technical, reflecting a four-point enhance within the ‘main buy index’ part. Neil Bellamy, shopper insights director at GfK, mentioned this “uptick is partly pushed by main retailer gross sales occasions,” including that after years of excessive inflation, “savvy shoppers have tailored their buying methods to profit from their cash.”

Nevertheless, the headline confidence determine masked rising nervousness about private funds. Whereas households’ evaluation of the final financial scenario improved, their outlook for their very own funds over the approaching 12 months worsened.

This pessimism is probably going tied to excessive saving charges and the anticipation of additional tax hikes from Finance Minister Rachel Reeves on the annual funds on November 26. Economists recommend households are saving extra because of the 2022 inflation shock and a deteriorating labour market.

With the funds announcement scheduled simply two days earlier than Black Friday, Bellamy famous that retailers will probably be “watching carefully to see whether or not the Chancellor’s Price range… boosts or dampens spending throughout that essential weekend.”

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This GfK report presents a combined and cautious sign for markets. Whereas the headline rise may supply a superficial enhance to retail shares, buyers will possible give attention to the deteriorating outlook for private funds. This underlying pessimism, pushed by fears of tax hikes, suggests shopper spending will stay fragile.

This report dampens optimism for a powerful retail restoration and can possible preserve strain on GBP, because it reinforces the view that households are bracing for a monetary squeeze, which might mute spending even through the essential upcoming Black Friday interval.