Resurgence in UK Consumer Spending

Resurgence in UK Consumer Spending

Consumer confidence in the United Kingdom is showing signs of revival, with the balance of retailers reporting falling sales reaching its lowest level in ten months. This indicates a potential surge in consumer spending. The Confederation of British Industry (CBI) indicates a slowdown in the decline of retail sales in February, with a weighted balance of -7 percent compared to the previous month's -50 percent.

Factors supporting this trend include reduced price increases, improved consumer confidence, and steady wage growth. The weighted balance index reflects the proportion of retailers reporting increases or decreases in transactions compared to the previous year. The decreasing balance indicating price increases suggests a potential easing of inflationary pressures in the retail sector throughout 2024.

Selling price inflation in retail has declined to a net balance of 54 percent in the year to February, the lowest since mid-2021. This aligns with projections of a further decrease in consumer price inflation from its current rate of 4 percent.

Despite the recovery in retail activity in February, retailers anticipate further sales declines in the upcoming month. Consequently, plans for headcount reductions and investment cuts are ongoing. The employment index indicates six consecutive quarters of negative territory, suggesting continued job cuts in the coming month.