UK Consumer Confidence Shows Modest Growth Despite Middle East Tensions and Inflation Worries

British consumer confidence has demonstrated a slight improvement but remains delicate as mounting tensions in the Middle East threaten to drive petrol prices higher, according to the latest GfK index findings.

The respected consumer sentiment measure advanced two points in June, settling at -18, though this figure stands notably below the -12 recorded in the previous year. The index, which serves as a crucial barometer for both government policymakers and the Bank of England, has maintained negative readings since September 2021.

The overall economic outlook showed mixed signals, with consumers expressing marginally increased optimism. The assessment of the past year’s economic performance rose three points, whilst the outlook for the coming 12 months improved by five points. These measures remained firmly negative at -43 and -28 respectively.

Personal financial situation scores held steady, with retrospective measures at -7 and future expectations maintaining a positive position at 2. GfK’s consumer insights director, Neil Bellamy, noted that whilst consumers remained steadfast in their financial assessments, confidence continues to be undermined by persistent inflationary pressures.

The cost of motor fuel has begun to climb following Israel’s military action against Iran, with petrol now reaching 132.8p per litre and diesel at 138.9p, according to AA data. These increases reflect broader concerns about regional stability and its impact on global oil prices.

Generation Z appears to be driving positive sentiment shifts, with younger demographics displaying the strongest optimism about future prospects. The British Retail Consortium’s separate survey indicated that consumer confidence has reached its highest level since the Christmas period, potentially influenced by April’s minimum wage increase.