Consumer confidence on the wane

Consumer confidence waned last month as people took a dimmer view of the likely development of their own finances over the coming year and backed away from making major purchases.

The research group GfK Martin Hamblin said its consumer confidence index had dropped to zero for February from +1 in January, which had been a strong rise from the -3 in December.

However, it said consumers' confidence over the economy more generally had improved last month to its highest since June 2002.

Howard Archer, an analyst at Global Insight, said: "Consumer sentiment has clearly benefited from the lack of interest rate hikes since August. The strength of the labour market, reduced fears of a housing market crash and attractive high street prices also seem likely to be helping confidence."

The City is expecting the Bank of England to raise interest rates again as inflation is picking up and the housing market looks to be levelling out after weakening in the second half of last year.