UK Consumer Sentiment Held at Nearly Three-Year High in August

• UK consumer confidence remained at its highest level since September 2021, with the GfK index steady at -13 points in August.
• Optimism was driven by improved outlooks on personal finances and willingness to make major purchases.
• The Bank of England’s recent interest rate cut contributed to the positive sentiment, but future rate decisions remain uncertain.

London, August 23 (FFN) – Consumer sentiment in the UK remained at nearly a three-year high in August, buoyed by optimism regarding personal finances and major purchases. This was revealed by the latest consumer confidence survey from the GfK institute, as reported by Reuters.

The GfK Consumer Confidence Index remained unchanged at -13 points in August, the same as in July, which also marked the highest level since September 2021. However, the results fell short of economists’ expectations, who had anticipated an increase in the index to -12 points.

The main confidence index was bolstered by two sub-indices: the willingness to make major purchases, which rose to its highest level since January 2022, and the expectations for personal finances, which also improved.

Analysts attribute the higher consumer optimism to the Bank of England’s interest rate cut in early August, which lowered the main rate from a 16-year high of 5.25% to 5%.

However, the decision was narrowly passed by the Bank’s Monetary Policy Committee, with a 5-4 vote, reflecting a divide among members on whether inflationary pressures have sufficiently eased. Bank of England Governor Andrew Bailey and other officials have indicated that further rate cuts might be postponed in the coming months.

Investors are also uncertain about the upcoming September meeting of the central bank, with only a 30% chance of another rate cut expected. Many anticipate that the Bank of England will make one more rate cut this year, likely at its November meeting.