UK consumer confidence hits two year high despite inflation warning

UK consumer confidence unexpectedly rose to a two-year high in August, with GfK’s index improving to -14 from -17 and beating expectations for a drop to -18. The standout detail was a jump in the major purchases sub-index to its strongest level since December 2021, suggesting households may be more willing to spend on big-ticket items. The reading adds to a run of firmer UK data and could support retail activity and broader consumer-led growth in the months ahead. However, the survey also warned that inflation is rising again and geopolitical uncertainty remains a risk, which could limit the durability of the improvement in sentiment. Overall, the report is mildly supportive for UK economic momentum and potentially constructive for domestically focused UK equities, but it does not change the fact that price pressures remain a key headwind.