British consumer confidence rose to its highest level in two years this month, according to a survey published Friday, adding to a recent run of stronger-than-expected UK economic data.

GfK's Consumer Confidence Index climbed to -14 in August from -17 in July, well above a Reuters poll of economists that had forecast a decline to -18. The reading was the strongest since August 2024. Because the index remains in negative territory, downbeat respondents still outnumber upbeat ones, so the gain points to a narrowing gap between pessimists and optimists rather than outright optimism.

The improvement was broad-based, with four of the survey's five key sub-indexes rising over the month. The standout was the measure of confidence in making major purchases, which rose to its highest level since December 2021. That is a closely watched indicator for retailers and durable goods sellers because it tends to track big-ticket spending more directly than the headline index.

Personal financial confidence for the next 12 months rose to its highest level since January, while expectations for the broader economy climbed to a two-year high. The survey suggests households are becoming more willing to spend on larger purchases, even as the wider economic backdrop remains uncertain. Household consumption accounts for a large share of UK economic output, which is why confidence gauges like GfK's are tracked as an early signal of whether consumers will keep underpinning growth.

Neil Bellamy, consumer insights director at GfK, struck a cautious tone despite the stronger readings. He said inflation was back on the rise and that continued uncertainty in the Middle East and elsewhere still posed challenges that could test UK consumers in the months ahead. His inflation warning is consistent with official figures published earlier this week showing UK headline inflation picking up in July.

The GfK findings also echo a broader pattern across UK sentiment surveys. Other gauges, including YouGov/Cebr, BRC-Opinium, Barclays and LSEG/Ipsos, have all shown improvement over the past month, lending support to the view that the latest gain is not confined to a single dataset.

GfK's survey has tracked UK consumer sentiment since 1974 and is based on interviews with 2,000 adults conducted between July 30 and August 12. Whether the brighter mood translates into actual spending will become clearer in upcoming official retail sales and growth data.

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Earlier this week:

UK headline inflation picks up in July, core prices hold steady

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Info via Reuters.