The new year has brought disappointment in financial markets with downgrades to profit expectations - not just for Tesco, with its new guidance, but also Morrisons. While such an outcome is a bit mellow for investors and value is clearly to the fore at present - as is evident from the extensive vouchers and discounts currently on offer - maybe there are one or two indicators suggesting brighter times ahead.

The basis for this assertion partly reflects favourable comparatives. It also looks as though inflation is finally falling, benefiting from the fallout of the VAT rise, the annualisation of last year’s oil price rise and lower soft commodity prices.

With easing inflation, households are less worse off and while there aren’t grounds for putting the bunting out just yet, we expect some key data indicators to show improving trends.

In particular, we look to the consumer confidence scores, which we expect to improve, and reports such as the Asda/CEBR income tracker, which should also show households are less worse off year-on-year maybe even better off in the second half.

We are also heartened by the recent UK public sector borrowing data for January, which implies that year-end government debt levels may be beaten, while the manufacturing export information for the start of 2012 is considerably stronger the strength of the US economic recovery is also encouraging.

A more favourable underlying backdrop is a necessary pre-condition for the recovery of the UK consumer economy. However, the nature and extent of this recession will have some enduring features. We were struck by the comments of Justin King and Andy Clarke recently about shoppers - most are savvy and finding value is ‘cool’. Having materially lowered food waste, there is no expectation of a return to such profligacy even if better off. Additionally, many folk remain in debt, with Asda recently recording that a quarter of women are borrowing to get by.

The UK consumer is in a slog, which takes time to enter, live through and emerge from. Maybe we are well into the ‘live through’ stage in which stabilisation brings the tunnel in sight if not the light at the end of it.

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