UK consumer confidence improves after slowdown in inflation

Consumer confidence across UK households improved this month amid a boost from easing inflation, according to new data.

The S&P Global UK Consumer Sentiment Index (CSI) survey moved closer towards the 37-month high it struck in July after a post-election bounce.

The survey, which tracks consumer financial wellbeing, labour market conditions, household spending, saving and debt, recorded a reading of 47.3 for October.

It represented an increase from 46.0 in September.

Any reading above 50 is deemed to be positive, with a reading below that being in negative territory.

Second-highest reading

Although the latest figure therefore represents slightly negative broader sentiment, it is the second-highest reading in over three years and highlights an improvement among consumers.

The data was collected from a panel of 1,500 UK households between October 10 and 14.

Maryam Baluch, economist at S&P Global Market Intelligence, said: “Consumer confidence is showing signs of reviving again after being hit by gloomy talk surrounding the Budget, which pulled sentiment off the recent post-election high seen in July.

“Confidence is being supported first and foremost by the strong labour market, with the survey showing both job security and income from employment improving at some of the fastest rates seen since data were first collected in 2009.

“An easing of inflation worries, combined with expectations of a further lowering of interest rates, has also helped allay worries over the cost of living.”

Inflationary pressures

Last week, the Office for National Statistics revealed that UK Consumer Price Index (CPI) inflation dropped to 1.7% in September – its lowest level since April 2021.

Surveyed households noted this month that the strain on their current finances eased further due to weaker inflationary pressures.

Meanwhile, job security also improved for the eighth consecutive month and income received from employment also grew, according to the data.