Consumer confidence rose by two points in April, suggesting the public have come to terms with the recent rate rises by the Bank of England, says Nationwide.
In the latest Nationwide Consumer Confidence Index, in partnership with TNS, the firm says in April consumer confidence rose to its highest point since October 2006, with a two point increase to 90 – above the three month average of 88.
Nationwide points out this is the fourth consecutive rise in the confidence, and suggests consumers have accepted the three recent interest rate rises and are more upbeat going into the summer months.
And the Expectation Index also saw a two point rise to 91, as the survey of a 1,000 people suggests confidence about the future economic and employment situation continuing to improve from its lowest point of 81 in December 2006.
The Present Situation Index increased two points to 89, its highest level since November 2006, as the number of people positive about the current economic situation increased from 37% to 40%, while the number of people who think there are currently few jobs available slipped from 27% to 25%, the lowest level since October 2006.
Spending confidence increased by six points to 89 in April, following an 11 point fall in March, as 21% of people think it is a good time to make a major purchase such as a car or house, while 43% believe the time is right to purchase household items.
Nationwide says the increase is likely to reflect the Easter sales season, and warns it is too early to say whether spending confidence has clearly improved as the index still remains 18 points lower than a year ago.
In addition the research reveals expectations for future house price growth improved in April, with consumers predicting house prices will rise 3.5% over the next six months, up form 3.2% in March.
Fionnuala Earley, chief economist at Nationwide, says: “This increase in confidence suggest consumers have come to terms with the recent interest rate rises. But with inflation more than 1% above target, it seems likely the MPC will this week increase rates at least one more time.”
“The extent to which this hits consumer confidence will to some extent depend on the impact of falling utility prices this summer against higher debt repayments.”
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