U.K. consumer confidence held at the highest since June last month as slowing inflation eased pressure on consumers, GfK NOP Ltd. said.
An index of sentiment remained at minus 29 from January, the strongest reading since June, the London-based research group said in an e-mailed report today. A measure of Britons’ outlook for the economy rose 4 points to minus 29.
U.K. inflation slowed to the weakest in 14 months in January, and consumer spending rose for the first time in 1 1/2 years in the fourth quarter. Still, Bank of England Governor Mervyn King said Feb. 15 the recovery will be “slow and uncertain” as Europe’s sovereign debt crisis weighs on growth.
Today’s report provides “grounds for cautious optimism,” Nick Moon, GfK Social Research managing director, said in a statement. “Next month’s results will determine whether we are seeing the beginnings of a sustained improvement in consumer confidence, or whether this is merely a steadying of the ship.”
An index of shoppers’ assessment of the economy over the previous 12 months fell 2 points to minus 60. A measure of the climate for making major purchases dropped 5 points to minus 27.
A gauge of Britons’ personal situation over the previous year rose 1 point to minus 21, and of their situation in the coming 12 months gained 3 points to minus 6, the highest since May. GfK interviewed 2,000 people from Feb. 3 to Feb. 12.
Inflation slowed to 3.6 percent last month as an increase in sales tax last year dropped out of calculations. Policy makers forecast price gains will slow further this year as the recovery struggles to gain traction.
While consumer spending rose 0.5 percent in the fourth quarter, gross domestic product fell 0.2 percent, the Office for National Statistics said Feb. 24.
The Bank of England’s quarterly forecasts published this month show the economy expanding 1.25 percent this year, and picking up to 2.76 percent in 2013. The bank expanded its bond-purchase program by 50 billion pounds ($79 billion) to 325 billion pounds this month.