Consumer sentiment in the UK improved in January but there were signs that consumers might be starting to cut down spending as last year's Brexit vote had pushed up inflation, a survey published today showed.
Market research company by Germany's largest market research institute GfK's monthly consumer sentiment index rose to -5 in January from -7 in December, higher than a median forecast of -8 in a Reuters poll of economists.
However, according to commentators, GfK's measure of the appetite for major purchases among consumers was down to 10 from 12 in December. The dip could indicate slower consumer spending this year, Joe Staton, head of market dynamics at GfK, said.
In December, GfK reported a significant jump in households' willingness to make major purchases. According to The Bank of England, consumers might have brought forward big purchases in anticipation of price rises in 2017.
''Rising inflation and weak income growth is forecast to squeeze households' disposable income, and these two factors could conspire to depress confidence for the year ahead,'' Staton said today.
''It's certainly difficult to see where the oomph will come from over the short term.''
The survey was carried out through interviews with over 2,000 respondents selected to be representative of the population as a whole, and had been running since 1974.
The results for January showed that while most people felt hopeful about their personal financial situations over the next 12 months, their confidence in the UK's general economic outlook remained bleak.
The overall score for economic optimism in the UK was down 18 points since January 2016 and at 23, remained unchanged from last month.
Staton said, "Although consumers report that they are feeling upbeat about their personal financial situation for the coming year, stubborn concerns about the wider economy looking back 12 months and ahead 12 months are ensuring the Overall Index Score remains stuck in gloomy territory.''