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There is a decline in UK consumers’ appetite for expensive items like television sets and cars Reuters

The confidence of consumers in the UK has improved month-on-month in January, according to the latest survey published on Tuesday (31 January) by market research firm GfK.

Its consumer confidence index, which is released every month, showed a reading of -5 in the first month of 2017. This marked a two-point improvement over December's -7 reading. Additionally, the reading was better than the -8 forecast by economists in a Reuters poll.

Joe Staton, head of market dynamics at GfK said the negative reading came despite strong GDP and record FTSE highs. He added that this was amid various factors such as Brexit uncertainty, Blue Monday and a weak pound post the Brexit vote that has resulted in an increase in prices.

Three of the five measures that go into making the index saw an uptick this month. Meanwhile, one measure remained unchanged while the other remaining one declined.

The measure that saw the decline was the major purchase index. This fell two points month-on-month to 10 in January. Year-on-year, this marked a six-point decline.

This fall indicated a decline in consumer's appetite for expensive items like television sets and cars. Staton said this decline also signalled a spending slowdown in the year ahead.

"Rising inflation and weak income growth is forecast to squeeze households' disposable income, and these two factors could conspire to depress confidence for the year ahead. It's certainly difficult to see where the oomph will come from over the short term," Staton was quoted as saying by City AM.

The two measures that saw an uptick were consumers' view of their personal finances and their view of the general economic situation. While the former was up three points over the past 12 months, the latter was up two points. Meanwhile, what remained unchanged was expectations for the economic climate in the next year. This reading remained the same at -23.

Commenting on the same, Staton said, "Although consumers report that they are feeling upbeat about their personal financial situation for the coming year, stubborn concerns about the wider economy looking back 12 months and ahead 12 months are ensuring the overall index score remains stuck in gloomy territory."