CONSUMER confidence towards the economy has lifted to its strongest levels in over three years with the majority of people now expecting to be better off in the coming months, a report has found.
Lloyds Bank’s Spending Power report said confidence lifted by six points in January to reach a new all-time high of 129 points for the monthly survey, which started in November 2010.
The report, which surveyed more than 2,000 people across the UK last month, said the balance of opinion about their future level of discretionary income was at its most positive since records began.
A net balance of 2% of people think they will have more money to spend in six months time rather than less.
The balance of people who are positive about the current state of their personal finances is also the strongest since the survey began, with 57% saying their situation is excellent, very good or somewhat good.
But Lloyds said that instead of choosing to spend, people appear more inclined towards saving more and paying down debt. The balance of people planning to shave off more of their debts in the coming months rather than less rose to 11% in January.
Meanwhile, a balance of 14% of people expect to squirrel more money away rather than less in the future.
Philip Robinson, director of personal current accounts at Lloyds, said: “With consumer sentiment continuing its upward trend, together with the highest positive levels seen to date towards personal finances, 2014 continues to show signs of a more stable year.”
While feelings about the UK’s economic situation have improved strongly over the last year, spending on gas and electricity bills is still “growing rapidly” at about 6% on a year ago, the report said.
Gas and electricity bills remain a source of inflation concern for more than three-quarters (77%) of consumers, according to the findings.
Figures released last week showed that inflation fell below the Bank of England’s 2% target for the first time in more than four years in January, easing the squeeze on households.
The Consumer Prices Index (CPI) dipped to 1.9% in January from 2% in December and experts have predicted that inflation will remain under the 2% target throughout 2014, fuelling hopes that wage growth will finally overtake rises in the cost of living.
Meanwhile, Lloyds’ report showed that consumer confidence in the housing market continues to grow, following the launch of the Government’s flagship Help to Buy scheme last year, which gives people with a deposit as low as 5% a helping hand on or up the property ladder.
People living in London, which has seen house price growth racing ahead of the rest of the UK, were found to be the most upbeat about the housing market, with 54% of people living there feeling positive.
Those living in Northern Ireland, where prices have fallen sharply in recent years and are only just starting to stabilise, were the most downbeat, with 68% of people there saying the housing market is “not good” or “not good at all”.
Confidence in jobs continues to improve across the UK, with the percentage of people feeling the employment situation is “not good at all” dropping by 12% over the last year, the report said.