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Energy prices and interest rates 'shapes consumer confidence'

Published: 14/04/2011

Energy price movements and interest rate expectations will shape consumer confidence over the coming months, according to Nationwide's chief economist Robert Gardner.

Commenting on the latest Consumer Confidence Index by Nationwide, which showed that confidence rose five points in March, Mr Gardner welcomed the change in direction, but noted that the index is still at a low level.

Indeed, February saw the lowest ever level of consumer confidence and March's figure did not reverse this fall.

The economist noted: "Oil prices have hit new all-time highs in sterling terms in recent weeks, which will maintain the squeeze on already hard-pressed household budgets", suggesting that the coming months will still be hard.

Figures from the index also revealed that spending confidence has risen 13 points on February's low, the first rise since the VAT rate was increased to 20 per cent last January.

However, expectations of house prices remains low, with homeowners predicting the value of their homes will fall by 0.9 per cent over the next six months, compared to the 1.1 per cent fall they expected the month before.

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Last Updated: 11-02-2012