Improvement seen in consumer confidence levels

Over the past year consumer confidence in the UK has plummeted, with soaring inflation, rising living costs, rocketing petrol and food costs, and the effects of the global credit crunch on the housing and financial markets all impacting upon confidence levels and leading to the ongoing economic downturn. However, officials have suggested that there has been an increase in consumer confidence levels for the second month in a row.

In a report earlier this month industry officials said that it looked as though the recent interest rate cuts applied by the Bank of England and the VAT reduction applied by the government were starting to take effect when it came to consumer confidence levels.

However, whilst the level of consumer confidence has increased based on survey results, it is still close to an all time low following a particularly turbulent year financially for most consumers.

One official involved in the survey stated: “The Consumer Confidence Index has improved again this month after the interest rate cut and the drop in petrol prices, but continues to hover at near record lows. The crucial question is whether the improvement in this index will be translated into activity on the High Street during the January sales.”

The major purchases index increased by ten points in December, but was still fifteen points lower than the same period last year. It is thought that consumers are far less optimistic about the state of the economy over the forthcoming year, and fewer people are likely to save money compared to the previous month.

The rise for December came from increased confidence in making major purchases, although this will be largely down to the fact that consumers have been making larger purchases for Christmas gifts.

Tags: improvement, drop, VAT reduction, increase, confidence levels