UK consumer confidence rose at its fastest pace in a year in January as the gap between inflation and wages began to narrow late on in 2017.
YouGov and the Centre for Economics and Business Research said their index of consumer confidence rose to 108.2 in the first month of 2018, from 107.1 in December as more British workers began to see their wage increases match, or better, rising prices.
While a score above 100 sets the standard for more consumers who are confident than those who are not, January's measure remained below 109.8 set exactly a year ago, and remained well shy of the 114 level seen before the referendum on European Union membership.
Better than expected start to 2018
Nina Skero, head of macroeconomics at CEBR, said: "Higher than expected gross domestic product (GDP) figures, a drop in inflation and now an uptick in consumer confidence - the new year is off to a promising start."
Indeed, the UK data seen so far in 2018 has been encouraging, but all have been backward-looking measures. Purchasing manager surveys, however, which measure the current levels of business confidence, have been ticking higher in recent months also.
Household finances improve
For much of 2017, consumer confidence was pegged back by rising inflation, as consumer price rises hit a peak of 3.1% in November, and low wage growth.
Inflation has since eased to 3%, while headline growth in average wage growth held at an annual pace of 2.5% in December.
Respondents in the survey said they were more confident over household budgets in the year to come, and the sub index measuring confidence in household finances rose to 95.5 from 90.
Skero at CEBR added: "With household finances and upcoming business activity metrics both on the rise, the 2018 slowdown that many had expected looks less likely to materialise.
“At CEBR, we expect the UK’s economic performance this year to remain broadly in line with that seen in 2017.
"It's not all good news though, as consumers remain doubtful about job security and future house prices."
Respondents said they were less confident about jobs in the coming 12 months, leading the report's job index down to 109.4 from 110.3.
Surveys from building societies and estate agents over the past 12 months have shown slowing growth in house prices, and respondents in the YouGov/CEBR survey remained concerned over falling house prices, with the house price index dropping to 131.7 from 132.5.