GfK’s Consumer Confidence Index increased by two points to -20 in February, with all measures up compared to January.
“In contrast to last month, when all five core measures were down, this month they are all up,” confirmed Neil Bellamy, consumer insights director at NIQ GfK. “The biggest improvement is in how consumers see their personal finances for the coming year, with an increase of four points that takes this measure out of negative territory to +2.”
He continued: “The Bank of England interest rate cut on 6 February will have brightened the mood for some people, but the majority are still struggling with a cost-of-living crisis that is far from over. Prices are still rising above the Bank of England’s target, and gas and electricity bills remain a challenge for many households.
“So, it’s no surprise that consumer views on the general economic situation are still lower than 12 months ago, suggesting that people don’t expect the economy to show any dramatic signs of improvement soon. Politicians looking for bright spots on the horizon will be disappointed.”
The index measuring changes in personal finances during the last year is up three points to -7. The measure for general economic situation of the country during the last 12 months is up two points to -44.
The major purchase index is up three points to -17, while the savings index stayed at +30 in February.
Meanwhile, the Office for National Statistics (ONS) reported a stronger-than-expected 1.7% increase in retail sales across the UK last month. The increase follows a decline of 0.6% in December and is higher than the expected 0.3% monthly rise.
January’s increase was driven mainly by food sales, while non-food sectors showed a decrease of 1.3% during the month. Despite this, overall retail performance is seen as a positive sign for retail, with online sales also seeing a 2.4% increase month-on-month.
Hannah Finselback, senior statistician at ONS commented: “Retail sales rebounded strongly in January following four months of consecutive falls. However, clothing shops and household goods stores had less of a successful month with retailers reporting lacklustre sales due to weak consumer confidence.”
Added Kris Hamer, director of Insight at the British Retail Consortium: “2025 got off to a good start with retail sales managing to weather the stormy January. Retailers put on extensive promotions, and customers who were looking to upgrade their furniture and household electrical appliances made the most of the many bargains that there were to be had. But, with consumer expectations for the economy falling almost 40pts since July 2024, and an unsteady job market, the next few months are hard to predict.
“This boost to sales barely touches the sides of the £7bn in new costs from the Budget and packaging levy facing the industry this year. The industry is already paying more than its fair share of tax, and with retailers already doing all they can to absorb existing costs, retailers will be left with little choice but to increase prices or reduce investment in jobs and shops, or both. To mitigate this, the government must ensure that its proposed business rates reform does not result in any shop paying higher rates than they already do.”
Top: Although consumer confidence and retail sales were up in January, the next few months will be hard to predict, say retail analysts.
