Consumer confidence in the UK has risen to its highest level in two years, marking a notable uptick ahead of the upcoming Budget. According to GfK’s consumer confidence barometer, the index increased by approximately one point to -13 in September, the strongest reading since August 2024. This marks the first time since summer 2024 that the index has grown for three consecutive months.

The improvement in consumer sentiment was largely driven by more positive public perceptions of the state of the economy over the past year, which improved by four points to -36. Additionally, households reported a better view of their personal financial situation, with those feelings improving three points to -3. Expectations for financial wellbeing over the coming year also rose slightly, moving one point to a reading of five.

The recent surge in confidence has been attributed in part to factors such as the summer’s record high temperatures and the FIFA World Cup, an effect that has been described as a “Burnham bounce,” referencing current Prime Minister Andy Burnham’s rising public support amid economic uncertainty.

However, despite these signs of recovery, analysts and experts have cautioned that the positive momentum could be fragile and may not be sustained. Neil Bellamy, consumer insights director at GfK, noted that while the headline figure is improving, overall confidence remains negative. He highlighted concerns that rising inflation, alongside increases in energy and fuel prices, could undermine consumer sentiment going forward.

Inflation in the UK rose from 2.9% in July to 3.1% in August. This upward pressure is largely due to sharp increases in petrol and diesel prices, as well as higher airfares, which offset relatively steady food prices. Energy costs, a major driver of inflation, show little sign of easing in the near term.

The persistence of elevated energy prices has prompted warnings from the Bank of England. Deputy Governor Clare Lombardelli indicated at a conference in Warsaw that higher energy costs make it increasingly likely that monetary policy will need to be tightened further. Although the Bank of England kept interest rates steady in its latest meeting, both the US Federal Reserve and the European Central Bank opted to raise rates recently, reflecting broader global concerns about inflation.

With the UK government preparing a Budget described by the Prime Minister as “challenging,” the trajectory of consumer confidence will be closely watched as external economic pressures and policy decisions unfold in the coming months.