Consumer confidence increased in March, with Nationwide Building Society’s monthly index suggesting sentiment rose by five points compared to February’s record low level.
And according to the financial services provider’s spending index, people in the UK were more confident about making household or major purchases in March, prompting the suggestion that consumers may be adjusting to January’s VAT rise.
The British Retail Consortium and KPMG’s Retail Sales Monitor for the month, which showed that like-for-like retail sales slipped 3.5 per cent year-on-year, would suggest otherwise, but Nationwide cautiously welcomed the change of direction nonetheless.
Robert Gardner, Nationwide’s Chief Economist, said: “After a fairly dismal start to the year there was some respite in March with consumer confidence picking up from the record lows seen in February.
“While this is a welcome change in direction, we must remember that the Index remains at a historically low level, and the up tick in March failed to reverse the fall suffered in the previous month.”
Office for National Statistics data published yesterday showed that youth unemployment in the UK increased in the three months to February, while a number of changes to the tax system were introduced this month, potentially creating a further barrier to consumer spending.
With this in mind, Gardner predicted that there is unlikely to be a significant improvement in people’s overall attitudes for several months to come.
“Energy price movements and interest rate expectations are likely to play a key role in shaping confidence over the coming months,” he commented.
“Oil prices have hit new all-time highs in sterling terms in recent weeks, which will maintain the squeeze on already hard-pressed household budgets.”