Rising hopes that inflation will fall and the Bank of England will subsequently lower interest rates were likely reasons behind a big lift in January UK consumer confidence, although confidence remains in negative territory.

How big? Up three points to -19, reaching its highest point in two years, research firm GfK said Friday. And in a further boost, optimism for coming 12 months appears to be strengthening with all five of the highly respected market research firm’s related measures up in comparison to December’s announcement.

Joe Staton, Client Strategy Director GfK, said “Importantly, the view on our personal financial situation for the coming year has gained two points and now stands at zero [27 points higher than this time last year]. This is exciting as it ends 24 consecutive months of negative scores for this measure and this significant change is the best single indicator for how the nation’s households feel about their income and expenditure.

He added: “Despite the cost-of-living crisis still impacting many households across the UK, consumers appear to be encouraged by the positive news about falling inflation. On balance, while there is national and global turmoil, the Consumer Confidence Index has started 2024 on a positive note – let’s see if this optimism continues.”

Its index measuring changes in personal finances during the last year was also up two points month on month at -12; this was 19 points better than January 2023.

As for the general economic situation of the country during the last 12 months, this rose three points to -41 compared to December, and was some 30 points higher than in January 2023. And expectations for the general economic situation over the next 12 months have increased by four points to -21, 33 points better than 12 months ago.

The Major Purchase Index, meanwhile, was up three points to -20, some 20 points higher than this month last year.

Although the Savings Index stayed the same at +27 in January, this is 13 remains points higher than this time last year.

Robyn Duffy, Senior Analyst at RSM UK, said of the latest data: “A third successive month of improved consumer confidence bodes well for spending in 2024. The drag on sentiment we’ve seen as a result of successive geopolitical crises, should finally start to wane from the middle of the year. With inflation forecast to reach 2% in Q2; interest rates expected to fall; possible tax cuts post Spring Budget; and real wages continuing to grow – consumers should feel like they have more cash in their pocket by the summer.

“In the meantime, consumers are set to remain cautious around spending, but there’s hope yet for January. Black Friday and Cyber Monday tempted savvy consumers to bring Christmas spending forward as November was the only month with an uplift in trade during the festive period. After a tough Golden Quarter, January discounting and this latest boost in confidence should deliver more robust spending for the start of the new year.”