Consumer confidence in the U.K. improved in November after three consecutive months of declines, signaling that Britons’ moods could have bottomed out and people are willing to spend more over the coming holiday season.
GfK’s consumer-confidence barometer rose to minus-14 in November from minus-17 in October, recovering some of the lost ground from the falls registered in the past few months.
Economists polled by The Wall Street Journal expected the barometer to decrease to minus-18.
“Headline consumer sentiment has ticked upward this month [November] despite decade-high inflation, fears of higher prices and worries over rising interest rates, and as the deepening cost-of-living squeeze leaves U.K. household finances worse off this winter,” GfK’s client strategy director Joe Staton said.
Consumer prices increased 4.2% on year in October after a 3.1% rise in September — the fastest rate of inflation since December 2011 and more than double the Bank of England’s 2% target.
Four out of five measures that make up the consumer-confidence barometer increased in November compared with the previous month.
The data showed that views on the general economic situation improved, but also signaled that consumers are less optimistic about their personal finances.
“This weakness is important as it reflects day-to-day plans to save or spend and is a strong driver of overall U.K. economic growth,” Staton said.
The rise of the headline index was driven partly by a seven-point increase of the major purchase index, which gauges demand among shoppers. This improvement could translate into higher spending in the run-up to Black Friday and Christmas, but consumers also know that when the festivities are over it is going to be a tough year in 2022, Staton said.
The survey polled around 2,000 individuals between Nov. 1 and Nov. 12.
The U.K. economy is losing momentum as the reopening rebound from the Covid-19 lockdown fades and supply-chain gridlocks affect growth. At the end of the third quarter, the U.K. economy was 2.1% smaller than it was at the end of 2019, before the pandemic hit. Economists don’t expect the country to fully recover from the shock until early 2022.