Research firm Growth from Knowledge (GfK)’s consumer confidence index rose by seven points in the month to February to a score of -38.

While the headline consumer confidence score remained ‘severely depressed’ according to director Joe Staton, the public mood was one of resilience.

The score is based on consumer responses to how their financial situation has changed over the last 12 months and how they expect it to change in the forthcoming year, their attitude towards the general economy, their confidence in making major purchases and their ability to save.

Across all measures, consumer confidence increased month on month and is now at the same level as April 2022, after falling to a low point of -49 in September last year.

The biggest increase in confidence was in the general economic situation over the next 12 months, up 11 points.

Victoria Scholar, head of investment at interactive investor noted: “The UK Gfk consumer confidence index increased to -38 in February from -45 in January, sharply outpacing expectations for a reading of -43. This was the biggest month-on-month rise in nearly two years with sentiment hitting the highest level since April 2022.

“Nonetheless, the reading is still languishing in negative territory and 12 points below its reading from February 2022 amid the cost-of-living crisis, lacklustre growth, and rampant inflation. But consumers were more willing to purchase bigger items and reported an improvement in their personal finances.”

No ‘green shoots’ just yet

Joe Staton, client strategy director, Growth for Knowledge, said: “Despite widely reported headwinds of inflation continuing to outstrip wage rises, and the ongoing household challenge from the cost-of-living crisis, consumers have suddenly shown more optimism about the state of their personal finances and the general economic situation, especially for the coming year. While it’s too early to talk about ‘green shoots of recovery’, the uptick across all measures should be welcomed.”

The pace of inflation slowed for the third consecutive to 10.1% according to the Office for National Statistics as the cost of transport, fuel, restaurants and hotels eased. But Staton warned that increase in optimism may be short-lived.

“The headline consumer confidence score is still severely depressed and the mood as well as the economy remain a long way off pre-lockdown levels, but a little consumer resilience might be what we need to soften any downturn in 2023,” he added. “However, many challenges remain and this may be nothing more than a bubble of hope – and bubbles always burst.”

Scholar agreed with that assessment but noted that there were signs of optimism.

She said: “Not dissimilar to the inflation picture, consumer confidence has a long way to go to restore more normal levels, but the latest reading points to an encouraging trajectory with sentiment starting to shift away from near all-time lows.

“With the UK narrowly staving off a recession, financial markets picking up, inflation starting to ease and interest rates approaching their peak, there are incipient signs of hope for the UK consumer.”