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Why is the Great British Consumer more willing to splash their cash in shops and online?

Why are UK consumers feeling so cheerful? Before Easter, consumer confidence figures showed the highest level of optimism recorded for 13 years.

Last year, consumer spending increased at the strongest rate recorded for seven years – since before the financial crisis.

Meanwhile, car registrations in March hit a new high last month – 6pc up on a year ago.

This does not appear to be a flash in the pan. The consumer side of the British economy has been improving for a couple of years now. So why is the Great British Consumer now feeling more confident and more willing to splash their cash in shops and online?

Four main factors seem to be responsible. The most significant is a dramatic change in the inflation climate. In the five years 2008-2012, consumer prices rose by 3.3pc a year on average, and inflation peaked at above 5pc twice. Inflation since then has fallen back sharply, averaging about 1.5pc last year and dropping to zero this year. Lower oil prices, cheaper food and a stronger pound have all contributed to this better performance.


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