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January 29, 2024

Chart of the Week: Western consumers more upbeat as inflation cools

by Fathom Consulting.

Falling inflation has lifted consumer confidence in the UK, US and EU, providing a boost to political incumbents ahead of upcoming elections. UK consumer confidence rose across all categories in January, according to GfK, a market research company, a fact which is likely to be welcome news for Rishi Sunak, the prime minister. However, it may take more than improved consumer confidence to turn around the 14 per cent approval rating of the current UK government, which must call an election within a year. In the US sentiment rose sharply in both December and January, reaching its highest level since July 2021, supported by confidence in both the inflation outlook and income expectations. While welcome news for Joe Biden, some recent opinion polls suggest that Donald Trump would win in November’s presidential election, assuming the two face off. Preliminary figures for European consumer sentiment showed a deterioration from December to January, however, countering the broad-based end of year improvement and keeping confidence well below its long-term average. This is in line with Fathom’s expectation for a consumer-driven recession in the euro area in the coming year.

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The views expressed in this article are the views of the author, not necessarily those of LSEG.



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