Decreased spending on fuel, gas and electricity, coupled with an improving employment picture, has sent consumer confidence soaring, enabling it to hit the second-highest level on record.
According to the latest figures from the Lloyds Bank Spending Power Report, consumer confidence surged up by five points from September to reach a score of 151, with all indices in the report showing an upward trend during October.
Ahead of the Autumn Statement, UK consumer confidence demonstrated a definite improvement, with sentiment towards the UK's economic situation increasing by eight points from last month, reaching a score of 283. Feelings towards the current situation also recorded an increase, climbing 10 points to 186. Consumers have no doubt been encouraged by the continued decline in petrol prices, which has seen average spending on fuel fall by around 6% year-on-year, easing the pressure on tight household budgets. A warmer than expected start to winter has also put some extra money in consumers' pockets, with energy bills still around 5.5% lower than this time last year.
Attitudes towards the current employment situation also showed a welcome improvement thanks to job creation and emerging wage growth, rising by six points to stand at -20 for October – still negative but an impressive 34% increase from 2013. This suggests that sentiment is again heading towards the levels seen back in August, when the index stood at -18.
Meanwhile, attitudes towards the housing market stayed relatively stable in October, in line with cooling market conditions and easing house prices. The index recorded a balance of -14, an increase of four points since this time last year. Greater London, perhaps unsurprisingly, had the most confident consumers, with a score of -10%. However, this was a fall from the 9% recorded at the beginning of 2014.
Commenting on the results, Patrick Foley, chief economist at Lloyds Bank, said: "Consumers remain in a positive mood, with the pressure on budgets from essential spending lifting a little. Though risks around the economic outlook have risen somewhat, emerging signs of a modest strengthening in real wage growth should help support the UK recovery."
Consumer feelings about their personal finance situation witnessed a five point fall to 13% in October. However, this is an eight-point improvement from this time last year, indicating that consumer attitudes are still on an upwards trajectory.
Opinions on future discretionary income also recorded encouraging results, with the balance of opinion between those feeling they will have more versus less money in the next six months remaining stable at 6%, an increase of 11 points since October 2013. Attitudes towards future saving were also positive, with a balance of 14%.
"The improvements we have seen from last month are a positive sign for all consumers, especially in the lead up to Christmas where finances are often stretched," said Greg Coughlan, director of personal current accounts at Lloyds Bank. "The continued improvement in individuals' personal finance situations shows that consumers have more confidence in their own finances."
However, there were some dark clouds on the horizon. Despite the balance on future income being positive, over half of consumers (55%) said that there will be no change in their discretionary income levels, which highlights the need to make your money work as hard as possible.
Overall, this research suggests that you may have more of a spring in your step when it comes to your finances – but there are still things you can do to increase your confidence in your personal finances even more.
Spending on gas and electricity may be down, but you can still shave off a few extra pounds by reviewing your energy deal. If you haven't changed supplier for a while, it's well worth having a scout around the market as you could be missing out on a great money-saving tariff. To start investigating, check out our online comparison tool and you could soon have even more money in your pocket.
Once you have got the best deals and you are noticing a bit of extra money in your bank account at the end of the month, you can make it work even harder by putting this extra cash into a savings account. This way, you will earn interest on your money, which will give you a tidy return. Putting your money into a fixed account will probably get you the best rates, so check out our top fixed rate savings deals to find an account to suit you.
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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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