Consumer confidence increases but index warns of trials in months ahead

Consumers have proven their resilience at the end of a rollercoaster year with their confidence slightly up, amid warnings that their positivity is likely to be tested in the months ahead.

Shoppers remain relatively confident about their personal finances, according to GfK's long-running Consumer Confidence Index, which has ended the year up one point this month to minus 7.

But GfK forecast that confidence "will be tested by the storm and stress of the year to come".

The index, compiled on behalf of the European Commission, shows a one-point drop in changes to personal finances over the past year but a one-point increase for the same measure looking to the year ahead.

The measure for the general economic situation of the country during the past 12 months has dropped one point - 21 points lower than this time last year - and has fallen one point for the year ahead.

But the major purchase index has increased seven points this month to positive 12 - five points higher than this time last year - and the savings measure is up six points.

Joe Staton, head of market dynamics at GfK, said: "The past 12 months were a really turbulent year for confidence in the UK as consumers reacted to the dramatic economic and political turmoil of 2016.

"While consumers remain relatively confident about their personal financial situation, confidence in the general economic situation for the UK has collapsed in the face of uncertainty about the future both at home and abroad.

"Despite everything, consumer resilience is shown by strength in the major purchase index, the 'now is a good time to buy' mantra being reflected in strong retail sales growth.

"Looking ahead to 2017, against a backdrop of Brexit negotiations, the decline in the value of sterling, and the prospect of higher inflation impacting purchasing power, we forecast that confidence will be tested by the storm and stress of the year to come."

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