British consumer sentiment rose to a two-and-a-half year high this month, as households’ improved assessment of the broader economy outweighed worries about personal finances.
The GfK consumer confidence survey showed on Friday a rise to -14 in June from May’s -17, reaching its highest level since November 2021.
This reading was above all forecasts in a Reuters poll of economists.
Consumer sentiment fell to a record low of -49 in September 2022, a month before high energy prices pushed inflation to a 41-year high of more than 11%.
Inflation returned to its 2% target last month, and morale has steadily recovered.
However, most households are still worse off than before the inflation surge, weighing heavily on Prime Minister Rishi Sunak’s political chances in the 4 July election.
GfK client strategy director Joe Staton said, “While June’s reading of -14 is the third month in a row that confidence has increased, the headline score remains negative owing to the difficulties so many have experienced as the unrelenting cost-of-living crisis batters household budgets.”
June’s survey showed a 7-point rise in households’ assessment of the general economic situation over the past 12 months, and a 6-point rise in the outlook.
Yet households’ assessment of their own financial prospects was down 3 points from May and their assessment of their financial situation over the year was unchanged.
Opinion polls show a narrow majority of the British public expect to have to pay more tax, regardless of whether Conservative or Labour form the next government.
Most economists forecast Britain’s overall tax burden, currently the highest since 1949, is set to keep rising.
This is aggravated by weak growth, high debt interest payments and increasing demands on public services.
Read More: UK Inflation Back To 2% Target For The First Time Since 2021
