A rush to buy Christmas presents early to avoid being stung by potential shortages has lifted Brits’ confidence.
Shoppers are ready to pounce on big ticket purchases at Black Friday and over the festive period, research by GfK has found.
Intention to splurge on expensive products jumped seven percentage points over the last month, climbing to minus three points.
Although still in negative territory, major purchase intentions are up 25 percentage points from last year, underlining the scale of recovery in household finances from the depths of the Covid-19 crisis.
Brits’ confidence in their personal finances over the coming year also improved, strengthening to two points. Again, over the last year, that measure has climbed seven points.
Joe Staton, client strategy director at GfK, said: “Is this a sign that shoppers are ready to bounce back, after last year’s cancelled family gatherings, with a Christmas splurge in coming weeks? That’s how it looks.”
Elevated spending intentions and improving confidence in finances lifted GfK’s overall consumer confidence index, which has been running on a monthly basis since the 1970s, three points to minus 14 points.
This time last year, consumer confidence was shot at minus 33 points.
Consumers’ brighter outlook comes despite inflationary headwinds swirling around the UK economy and a deepening cost of living crisis.
Figures released by the Office for National Statistics (ONS) this week showed inflation hit its highest level since December 2011, climbing to 4.2 per cent, more than double the Bank of England’s target.
The prospect of real income being squeezed led to weak improvements in consumers’ confidence about their finances.
“Consumers… know that when the festivities are over it’s going to be a tough year in 2022,” Staton added.
Businesses seem to be coping better than households. Separate research published by Lloyds Bank today found firms are shrugging off the summer slowdown, with 12 out of 14 sectors tracked by the lender growing.
However, swelling costs – the highest since 2016 – prompted every sector to hike prices, indicating red-hot inflation is likely to bite for longer.