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British retail sales surge as consumer confidence improves -Report

*A 1.2 percent increase recorded February 2023 comes despite rising inflation and interest rates in the economy of the United Kingdom

Isola Moses | ConsumerConnect

British retail sales jumped February 2023, rebounding for the second successive month, while consumer confidence increased March this year, according to data published March 24.

The figures came despite rising inflation across the United Kingdom (UK) and a series of interest rate increases from the Bank of England (BoE).

ConsumerConnect had reported the BoE recently warned companies in the country to be wary of inflation do to not induce increases in interest rates, as the UK inflation rate unexpectedly rise to 10.4 percent February.

The volume of retail sales, or the amount of goods sold in shops, reportedly increased 1.2 percent between January and February 2023, following a 0.9 percent increase the previous month, according to figures from the Office for National Statistics.

The figure was well above analyst forecasts of a 0.5 percent increase.

Separately, research group Growth from Knowledge (GfK) said its index of UK consumer confidence, a closely watched measure of how people view their personal finances and wider economic prospects, had risen this month by two points to -36.

Similarly, Irish households may not see lower energy bills any time soon even as ESB doubles its profits

The reading was the highest since March 2022 and in line with analyst forecasts, but it remained well below zero, indicating an overall decline in confidence, according to report.

Respondents to the survey, which ran between March 1 and 14 this year were more optimistic about the year ahead, with the sub-index measuring their general outlook on the future economic situation increasing by 3 points to -40.

Joe Staton, Client Strategy Director at GfK, however, said the overall improvement masked “continuing concerns among consumers about their personal financial situation.”

Respondents’ forecast for their personal finances in the next year fell three points to -21.

Staton noted this indicated that “wages are not keeping up with rising prices and the cost of living crisis remains a stark reality for most.”

Overall, consumer confidence in March was five points lower than in the same month in 2022, as soaring energy bills, higher interest rates and food prices squeezed household budgets over the past year, reports The Irish Times.

The GfK data also followed confirmation last Wednesday from the Office for National Statistics (ONS), that consumer price inflation rose to 10.4 percent February, up from 10.1 per cent January.

Meanwhile, the unexpected uptick in inflation has reinforced fears that price rises are increasingly being driven by domestic pressures in the services sector, which tend to be more persistent than the external shock of high energy prices.

“Just having enough money to live right and pay the bills remains the number one concern for consumers across the UK,” Staton stated.

Nevertheless, GfK noted that consumers in March reported a slight uptick in their willingness to make expensive purchases, as well as in the likelihood that they would put money into savings accounts.

Ms. Ashley Webb, UK economist at Capital Economics, a research company, said that “even though real household incomes have been eroded due to high inflation, households appear to have supported their real spending by using their pandemic savings.”

Webb said that resilience in the labour market had also lifted consumer morale.

The survey comes a day after the Bank of England raised interest rates by 0.25 percentage points to 4.25 per cent, marking the central bank’s 11th consecutive increase since December 2021 in response to high inflation.

Ms. Webb also noted while further rises in the base rate were “likely to weigh on consumer confidence, we don’t expect interest rates to rise much further from here.

“Instead, we expect the easing in inflation and the resultant boost in real household incomes will support consumer confidence this year,” she said.

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