Proactive Investors - Consumer confidence showed “renewed optimism" as inflation starts to ease, according to a new survey.
GfK's closely-watched consumer confidence index ticked up five points in August, with all measures reversing the drop seen in July, although it remains firmly in negative territory at minus 25.
Joe Staton, client strategy director at GfK, said: "Although the headline figure remains strongly negative at minus 25, hopes for our personal financial situation for the coming year are heading back towards positive territory, a metric that is key to indicating the future financial position of households.
"This renewed optimism can also be seen in the similar turnaround for our view on the general economic outlook for the next 12 months, and the eight-point advance in major purchase intentions is potentially better news for retailers as we move into autumn."
Confidence in the general economic situation for the next 12 months improved by three points to minus 30 - 30 points better than last August - against a backdrop of falling core inflation, higher interest rates and rising average weekly earnings, GfK said.
The forecast for personal finances over the coming year increased four points to minus three – 28 points higher than this time last year.
Gabriella Dickens at Pantheon Macroeconomics said: “A renewed recovery in consumers’ confidence makes sense, given the fall in energy bills in July and the drop back in mortgage rates over the past few weeks.”
“The improvement was broad-based, with consumers’ more upbeat about the year-ahead outlook for both the economy and their personal finances.”
But she noted: "Consumers’ confidence, however, still is well below its average since 1974…..suggesting households will remain cautious in the near-term, with some saving the additional cash from lower energy bills, while others will prioritise paying off debt.”