LONDON (Reuters) - Consumer confidence recovered only somewhat in March from the record low hit in the previous month, a survey showed, providing little relief for retailers suffering from consumers’ reluctance to spend.
Nationwide Building Society’s consumer confidence index rose to 44 from 39 in February, the group said on Thursday. The February number was revised up 1 point, but it was still the lowest in the survey’s history.
Nationwide’s chief economist Robert Gardner noted that consumer morale remained very downbeat even after the March rebound and the index was well off its long-term average of 80.
“We will need to see a succession of increases before we can say that confidence has returned anywhere close to pre-recession levels,” he said.
The downbeat consumer mood is likely to add to views that the Bank of England will keep interest rates at a record low of 0.5 percent in May as the recovery from the shock contraction of the economy at the end of last year looks still shaky.
The majority of the policymakers have repeatedly highlighted that they want to see the economy back on track before raising borrowing costs.
Many of Britain’s retailers are suffering from the poisonous mix of a rising cost of living, higher taxes and downbeat consumer morale, and sales fell at the fastest pace in at least 16 years in March.
Nationwide said consumers surveyed were slightly less pessimistic about the future, with the index measuring their expectations for the economy ticking up to 60 from 51.
The spending component — which gauges people’s appetite for buying household goods and other major purchases — rose to 66 from 53.
“This is the first increase in spending sentiment since the introduction of the 20 percent VAT rate in January — perhaps an indication that consumers are adjusting to the impact this is having on their own finances,” Gardner said.
But consumers’ assessment of their present situation was still subdued, with the index only edging up 1 point to 21.
Nationwide noted that the survey did not yet reflect consumers’ reaction to the government’s budget.
The government stuck to its deficit cutting agenda when it presented the budget on March 23, and a number of previously announced measures have only come into force in April.
Nationwide and polling company TNS-RI Research interviewed some 1,000 people between February 21 and March 20 for the survey.
Reporting by Sven Egenter; Editing by Ruth Pitchford