Although spending has climbed steadily since the end of the recession, consumer confidence has remained relatively subdued due to a combination of weak pay growth and lingering fears over the economy. However, in June, consumer confidence took an unprecedented turn for the better, climbing by 6 points to reach its highest level since the start of the new millennium.
According to the latest UK Consumer Confidence Index by GfK, all five measures used to calculate the level of consumer confidence in the country saw strong increases during the month, with consumers particularly keen to splash out on big ticket items such as furniture and electrical goods. In turn, this allowed the Index to rise to a reading of 7, the highest since January 2000.
Head of market dynamics at GfK, Joe Staton, believes that the steep rise may be due to the aftermath of the General Election.
He says; “We’re seeing a dramatic uptick in confidence this month, a real post-election bounce that’s put a spring in the step of consumers across the UK.
“June’s six point jump takes the Overall Index Score back to levels not seen since the late Nineties or early days of the Noughties.
“Across all key measures we’re reporting higher levels of financial optimism for both our own personal situation and for the general economy as a whole for the coming 12 months.”
GfK believes that, along with the steadier economic circumstances brought about by the conclusion of the General Election, the combined factors of low inflation and higher wage growth have allowed consumers to relax about spending in a way that has not been seen since before the Credit Crunch in 2008.
Wage growth, for example, grew by 2.7 per cent in the first quarter of the year when compared to the same period in 2014 according to official data released by the Office for National Statistics (ONS) – the fastest pace of growth since December 2008.
Of course, this news has been welcomed by retailers as the upsurge in consumer confidence appears to be the long-awaited sign that recovery in the sector is on track.
Mr Staton continues; “This renewed optimism could also translate into a busy time for retailers.
“The number of shoppers agreeing that ‘now is a good time for people to make major purchases such as furniture or electrical goods’ has powered ahead by a buoyant 14 points this month compared to negative sentiment for the same period last year.”
While many retailers are currently pursuing expansion plans, it is hoped that this news will encourage those lagging behind to actively chase growth opportunities, triggering further investment into the retail property sector.
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