Consumer confidence hits two-year high but ‘could soon falter’

Consumer confidence in the UK has surged to a two-year high, giving a significant boost to Labour MP Andy Burnham ahead of the upcoming Budget. GfK's consumer confidence barometer reached -13 in September, a one-point increase from the previous month and the highest level since August 2024. This marks the first time since summer 2024 that consumer confidence has improved for three consecutive months.

The rise in consumer confidence was primarily driven by Brits' perceptions of the state of the economy over the past year, which improved by four points to -36. Households' attitudes towards their personal financial situation over the past year also showed improvement, easing by three points to -3. Additionally, Brits' outlook for their financial situation in the coming year rose by one point to a reading of five.

GfK's September reading suggests that the "Burnham bounce" from the summer may be continuing, aided by record temperatures and the FIFA World Cup. However, consumer insights director Neil Bellamy cautioned that this rebound could be short-lived, as rising inflation threatens to dampen morale. Inflation rose from 2.9 to 3.1 percent in August, as fuel and energy prices increased, outpacing steady food inflation.

With energy prices showing no signs of falling, a Bank of England policymaker warned that interest rates may need to rise if energy costs remain high, potentially leading to further tightening of monetary policy.