LONDON (Reuters) - British consumer morale climbed to its highest in more than half a year in January, as lower energy costs and retailer discounts provided hard-pressed consumers with some relief, at least for now, researchers GfK NOP said on Tuesday.
The improvement may turn out to be temporary, and could just reflect a spillover from “the Christmas feel-good factor”, cautioned Nick Moon, managing director of GfK NOP Social Research.
The headline consumer confidence index in the GfK NOP survey rose to -29 from -33 in December, beating the average forecast of -32 in a Reuters poll and matching the level of a year ago.
“A few rays of light have started to reach long-suffering consumers, including falling inflation and the recent reduction in energy prices,” Moon said.
Latest data showed that British inflation fell sharply in December to 4.2 percent as fuel prices dropped and retailers lured customers with hefty discounts for clothes.
In addition, all of Britain’s “Big Six” energy suppliers have announced tariff cuts this month.
The rise in the headline index was driven by multi-month highs in most of its components, with the climate for big purchases deemed the best since December 2010.
Weak consumption has been a major reason behind Britain’s disappointing growth in the past year, as the government has reined in spending and households have grappled with falling real wages and rising unemployment.
The British economy shrank by 0.2 percent in the last three months of 2011 compared with the third quarter, according to official data last week, meaning it would enter a technical recession if it contracts again in the current quarter.
“Consumer confidence is still seriously depressed and we should treat this month’s modest improvement with caution. Should February show another rise, then we may be seeing signs that the gloom is dispelling,” Moon said.
The survey was conducted on behalf of the European Commission between January 6 and January 15 and covered 2,000 people.
Reporting by Olesya Dmitracova; editing by Stephen Nisbet