A leading consumer confidence index rose by nine points to forty-seven in January, the highest it has been since August 2011 – although this figure is still nearly thirty points below the average.
The improvement in consumer morale supports the Bank of England’s view that consumption will help stabilise the economy later this year, as a fall in inflation eases the squeeze on household budgets.
One chief economist said: “Looking forward, renewed hope that the UK will avoid a double-dip recession may support sentiment, especially since the downward trend in inflation is set to continue through 2012.
“With the UK recovery likely to remain weak in the first half of the year, a significant and sustained rise in consumer confidence remains unlikely in the near term."
The increase in consumer confidence is being attributed to improved industry surveys for the manufacturing and service sectors, as well as the recent sharp fall in inflation.
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