Rise in consumer confidence

Consumer confidence has risen to a nine month high, the Nationwide Building Society has reported.

“Much of the survey-based data has painted a more upbeat picture of the UK economy than official data in recent months – March’s Consumer Confidence index continues that trend,” said Robert Gardner, Nationwide’s chief economist. “The main Index jumped nine points in March, which is at odds with the challenging economic backdrop, with the UK economy tipping back into recession in the first three months of the year.

“The Consumer Confidence index has been fairly volatile from month to month, but since reaching an all time low in September last year the trend has generally been towards increased confidence. It may be that the general decline in inflation from the recent highs of 5.2% last September to 3.5% in March has helped to support spending power and therefore lift consumers’ spirits over the past six months.

“But with the economy expected to gather pace only slowly, the improvement in confidence may prove short-lived. Indeed, the sharp falls in inflation seen at the start of the year are unlikely to be repeated in the near-term, with inflation likely to fall back towards the 2% target only slowly. As a result, the easing price pressures will be less visible to households in the months ahead than at the start of the year.

“Moreover, the apparent improvement in sentiment over the past six months should be kept in perspective. The main confidence index remains more than 20 points below its long-run average, suggesting that households are still cautious.”