British consumer confidence bounced back in August after July's fall, signalling a modest increase in retail spending in the coming months, independent research firm GfK said today. GfK's consumer confidence barometer rose two points to plus four in August, after recording a three-point fall from June to July.

The numbers expecting the economic situation to improve over the next year rose four percentage points to 27 per cent from July, but consumers are still wary of splashing out on major purchases.

"Increased personal prosperity combined with dwindling saving intentions will lead to a slight increase in high street expenditure over the coming months despite little enthusiasm from consumers," GfK said.

A fall to 28 per cent in August from 30 per cent in July in the number of people planning a major purchase showed consumers are holding back on shop spending.

But the number who believe the economy has improved over the last year is at its highest since May 1998, at 28 per cent.

GfK, which conducts its research on behalf of the European Commission, said August's rise in consumer confidence banished fears that July's fall heralded a new downwards trend.

The latest figures confirmed the GfK's belief that the July drop was only a natural readjustment following a jump in May, when confidence generally increases, GfK said. "Whilst the possibility of fluctuations in sentiment remains, six consecutive months of positive index scores suggest that sentiment has achieved a measure of equilibrium," GfK said.