UK consumer confidence improved again in August, with shoppers’ expectations for retail spending rising sharply as sentiment towards the economy strengthened.
The latest BRC-Opinium Consumer Sentiment Monitor found expectations for the state of the economy over the next three months improved to -28 in August, up from -36 in July.
Consumers were also less pessimistic about their own finances, with the measure for personal financial expectations rising to -9 from -12 a month earlier.
Most encouragingly for retailers, expectations for personal retail spending jumped seven points to +8, compared with +1 in July.
Overall spending intentions also edged higher, rising to +15 from +13, although expectations around personal saving dipped slightly to -5 from -4.
British Retail Consortium chief executive Helen Dickinson said confidence in the economy had reached its highest point since the lows recorded at the beginning of the Iran conflict.
She said: “Consumer sentiment continued to rise with confidence in the economy hitting its highest level since the historical lows reached at the start of the Iran conflict.
“Expectations for personal finances saw a small improvement, driven by an optimistic Gen Z. This same generation also reported a bump in spending plans, as the stifling summer heatwaves are expected to give way to more shopping-friendly temperatures in much of the country.”
However, Dickinson warned that the improvement in sentiment could prove fragile if household costs continue to rise.
She said the Burnham administration was benefiting from a “honeymoon boost” in confidence, but argued that maintaining momentum would depend on the Government reducing pressure on consumers and businesses.
“The Budget will be the acid test of this government’s real commitment to growth,” she said.
“If the government can reduce retail business costs, from energy bills to business rates, it will be ordinary households who feel the benefit. A Budget that backs retail and reduces costs is a pro-consumer Budget.”
The findings were based on a survey of 2,000 UK adults conducted by Opinium for the BRC between 4 and 7 August.
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