British consumers are the most optimistic since the start of 2022 as they turn more hopeful about the economy with inflation on the wane and wages growing, a survey showed.
The GfK consumer sentiment indicator rose for a second month in a row to -21 in September, the highest since January last year, from -25 in August although it remained below the average of -10 for the survey, which has been running since 1974.
Economists polled by Reuters had forecast a fall to -27.
"While this month's improved headline score is good news, it's important to note many households are still struggling with the cost-of-living crisis and that economic conditions are tough," Joe Staton, GfK's client strategy director, said.
"The reality is that consumer confidence remains suppressed, and the financial mood of the nation is still negative."
Households' expectations for their personal financial situation over the coming year edged up to -2 to -3. A year ago, the reading stood at -40 after energy prices soared.
A gauge of views about the economy over the next 12 months improved more sharply to -24 from -30.
Consumer Price Inflation
Consumer price inflation dropped to 6.7% in August, down from a 41-year high of 11.1% reached in October 2022 but still more than three times the Bank of England's target.
The BoE on Thursday paused its long run of interest rate rises as the country's economy slowed, holding Bank Rate at 5.25% after 14 back-to-back hikes.
The GfK data was based on a survey of 2,001 people conducted between 1 - 13 September.
Sales growth at British supermarkets picked up in September, reflecting an unseasonal heatwave, according to market researcher NIQ.
The total value of UK grocery sales rose 10.3% year-on-year in the four weeks to 9 September, having been up 7.2% in its August report when wet weather held back sales growth.