Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. UK consumer confidence has surprisingly hit a two-year high this morning, but the recovery could be faltering as inflation climbs. Research group GfK has reported that its Consumer Confidence Barometer rose to -13 in September, a rise of one point compared with August, with people more optimistic about their personal finances and the wider economy.
That’s the highest level since August 2024, just after the last general election, and higher than forecast. Encouragingly, this is also the first time since summer 2024 that consumer confidence has risen for three months in a row. But less cheeringly, consumer confidence is still in negative territory, and there are signs that the recovery could be faltering.
Over the summer, UK businesses reported a “Burnham bounce” after the new prime minister took the wheel from Sir Keir Starmer, and announced measures including a cap on bus fares and a discount on business rates for pubs, clubs and live music venues. Bloomberg suggests GfK’s data shows this recovery is running out of steam, as higher energy costs push up inflation. Neil Bellamy, consumer insights director at GfK, explains: The return of higher inflation removes one of the strongest positives seen in previous months.
So, while the headline score continues to improve, confidence is still firmly in negative territory. With inflation, energy and fuel prices rising, could we soon see consumer sentiment falter?” GfK reports that consumers are less willing to buy big-ticket items this month, and more keen to save money instead. The only measure to fall this month was the Major Purchase Index, down one point, which comes as we head into the important Golden Quarter for retailers.
The Savings Index rose five points, which, although not used in our headline score, may indicate that those who can are thinking of building a financial buffer. 10.15am BST: Bank of England governor Andrew Bailey appears on a panel at the Monetary Economics Conference 1.30pm BST: US durable goods orders data 3pm BST: University of Michigan’s US consumer sentiment index
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