August saw a significant improvement in the UK’s economic situation index from last month, in part reflecting improved sentiment about the outlook for inflation.

Continued falls in per-customer spending on essentials, around 0.5 per cent lower than a year ago, also suggest a more favourable outlook for consumers. Among categories of essential spending, the fall in spending on gas and electricity continues, around 4 per cent lower than a year ago, while the cost of running a car has also fallen.

Patrick Foley, Chief Economist at Lloyds Bank, said: “An ongoing UK economic recovery…continues to provide the most tangible support to consumer sentiment. But against a backdrop of still-subdued wage growth, reduced pressure on household budgets from spending on essentials helps provide the room to undertake discretionary spending, further supporting the recovery.”

Greater London continues to be the most positive region with the South East the second most positive region. Scotland continues to be amongst the least positive regions, along with the North East. Feelings towards the housing market remain broadly steady. The East Midlands is the most positive region for August, while a fall in sentiment in Wales has left it as the most negative region.

Attitude towards the current employment situation has seen a significant year on year improvement. Greater London continues to be the most positive region, followed by the South East.

Consumers’ sentiment about their own personal financial situation has improved for August. Greater London is the most positive region, followed by Yorkshire and Humberside. Northern Ireland is the least positive region.

Philip Robinson, director of personal current accounts at Lloyds Bank said: “”People are feeling more confident than ever about the state of the nation’s finances as well as their individual financial situation. Confidence in the UK’s economy has improved, helping people to make their own plans with more conviction. As the future situation looks even rosier, now is a good time to starting saving for Christmas and spread the cost over the next three months.”