UK consumer mood improves, but inflation threatens recovery
UK consumer confidence has reached a two-year high, with the GfK Consumer Confidence Barometer rising to -13 in September, marking three consecutive months of improvement and exceeding forecasts. However, the momentum behind this recovery appears to be weakening, as rising inflation and energy costs threaten to undermine consumer sentiment and spending behaviour.
The September reading represents a one-point rise from August and is the strongest level since August 2024, when confidence improved following the general election. The initial optimism has been attributed to a "Burnham bounce" following new government measures including bus fare caps and business rate discounts for cultural venues. Yet despite this headline improvement, consumer confidence remains in negative territory, with consumers now less inclined to purchase big-ticket items; the Major Purchase Index fell by one point, whilst the Savings Index rose by five points, suggesting households are prioritising financial buffers amid economic uncertainty.
- Consumer confidence hits two-year high but weakening due to rising inflation.
- Consumers increasingly cautious about major purchases, preferring to save instead.
- Government optimism boost cooling as energy costs threaten household budgets.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Consumer confidence has reached a genuine two-year high with three consecutive months of improvement, exceeding forecasts—a measurable and reversal of downward trends. Government interventions like bus fare caps and business rate discounts are demonstrating real effects on household sentiment, showing that targeted policy can address cost-of-living anxieties. Whilst confidence remains negative, the direction and momentum matter: households are responding positively to measures that reduce their burdens, and rising savings reflect rational financial resilience alongside improved sentiment, positioning the recovery on firmer ground.
The case against
The headline masks a fragile reality: confidence remains deeply negative at -13, so reaching a two-year high is modest progress from a depressed baseline. Momentum is already weakening—only one point gained from August—suggesting the initial government-driven optimism is already fading. More fundamentally, consumers are withdrawing from major purchases and accumulating savings, behaviour that signals underlying anxiety rather than genuine confidence in the future. As inflation and energy costs rise, these gains are likely to evaporate, leaving us with a temporary psychological lift before renewed household pressure resumes.
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Originally published by The Guardian as “UK consumer confidence hits two-year high, but ‘Burnham bounce’ may be fading – business live”.