Consumer confidence rose in July, possibly due to government living expenses, according to a YouGov poll.
The two-point rise in the composite index from YouGov and the Center for Economics and Business Research (CEBR) ends a seven-month streak of declines that began in December 2021.
Much of the index improvement can be explained by an increase in household financing measures, which coincided with July and marked the advent of the first government cost-of-living payments to low-income households.
Despite the rebound, general public sentiment on household finances remains weak – the Bank of England’s first survey said inflation is expected to hit 13% this year.
Business activity also showed improvement, with employees slightly more likely to report that their jobs are busy than last month and that they are expected to be busy going forward.
Perceptions of job security also increased among British workers.
The only metric to show a decline was the retrospective home price metric, which fell 0.5 points. However, after three months of deteriorating prospects, homeowners are more optimistic than before.
Kay Neufeld, CEBR’s Head of Forecasting, said: “The first rise in the consumer confidence index since November 2021 provides a welcome respite after a strong series of declines that have fallen by more than nine points over the past seven months.
(PA Graphics) / PA Graphics
“It is worth noting that the strongest growth momentum in July came from backward and forward-looking domestic financial indicators.
“Nevertheless, growth on these measures has started from a very low base and the outlook remains difficult. As the first cost of living begins to weigh in, questions remain about the type of support families will have in the coming months as the energy price ceiling hits new record highs in October and January next year.
“Further headwinds will emerge as the UK economy is expected to slide to the brink of recession in the second half of the year, suggesting the surge in consumer confidence could prove short-lived.”
Emma McInnes, Global Head of Financial Services at YouGov, said: “While this surge in consumer confidence is undoubtedly positive news, there is still a long way to go to regain ground lost during the decline over the past seven months.
“And with the UK economy heading into recession and the energy price ceiling rising in a few months, there is every chance that this increase can be offset by a further long-term fall in the composite index.”