Consumers mood lifted despite ongoing squeeze

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Consumer confidence has hit its highest level since October 2009 despite the continued squeeze on spending power, according to research firm GfK.

The group described its findings as a “conundrum of Alice in Wonderland proportions” because wages are growing more slowly than average prices, meaning the spending power of average Britons is still being squeezed.

Nick Moon, managing director of social research at GfK, said: “As more and more official figures show that we are all worse off, with UK living standards at their lowest for a decade, the British public’s economic confidence continues to grow strongly – a conundrum of Alice in Wonderland proportions.”

The explanation is likely to lie in the recent run of upbeat economic news, which is making people more optimistic that their finances will turn a corner soon.

As well as official figures showing the UK economy growing at a more robust rate this year, and revising away of the double-dip recession completely, survey evidence shows businesses have been stepping up their expansion this summer.

Moon said: “With these figures receiving far more prominence than reports about declining real incomes, it is perhaps not surprising that people react by declaring themselves more optimistic.”