UK consumer sentiment returns to two-year high, GfK survey shows

FILE PHOTO: People walk along a high street in Croydon, Britain

LONDON (Reuters) - British consumer sentiment returned to a two-year high this month as households took a more positive view of the economy and their own finances, a long-running survey showed on Friday.

The GfK consumer confidence index rose to -19 in April from -21 in March, matching January's reading which was the highest since January 2022, just before Russia's full-scale invasion of Ukraine triggered a surge in energy costs and other bills.

Economists polled by Reuters had forecast a slightly smaller rise to -20. A year ago, the index stood at -30.

"These improvements reflect the impact on household budgets of lower inflation and the anticipation of further tax cuts," GfK client strategy director Joe Staton said.

"However, we are a long way from the much firmer sentiment last seen in the period before Brexit, Covid and the conflict in Ukraine," Staton said.

Inflation fell to a two-and-a-half year low of 3.2% in March, and April brought a nearly 10% increase in Britain's minimum wage as well as a 2 percentage point cut in the rate of national insurance contributions paid by employees.

Finance minister Jeremy Hunt has said he wants to cut taxes further if there is room in the public finances before Prime Minister Rishi Sunak calls an election, expected in the second half of this year.

(Reporting by David Milliken; Editing by William Schomberg)