Consumer confidence has continued its “upward momentum” despite the cost-of-living crisis remaining a daily reality for households, a survey suggests.
GfK’s long-running Consumer Confidence Index rose by two points in May as it slowly climbed out of negative territory to minus 17.
Confidence in the general economic situation over the next 12 months saw a four-point boost to minus 17, 13 points higher than last May.
The forecast for personal finances over the next year also rose strongly, by five points to positive seven – 15 points higher than this time last year.
However there was a slight dip in the index’s major purchase measure – an indicator of confidence in buying big-ticket items – down one point to minus 26 and two points lower than a year ago, reinforcing ongoing cost-of-living pressures on households.
GfK client strategy director Joe Staton said: “There was another strong showing for the UK Consumer Confidence Index this month, driven by a jump in the outlook for our personal finances and a boost for our view on the wider economy in the coming year.
“The only negative in May is the slight dip in our major purchase measure, reinforcing the fact that the cost-of-living crisis is still a day-to-day reality for all of us.
“However, with the latest drop in headline inflation and the prospect of interest rate cuts in due course, the trend is certainly positive after a long period of stasis, which has seen the Overall Index Score stuck in the doldrums. All in all, consumers are clearly sensing that conditions are improving.”
Linda Ellett, UK head of consumer, retail and leisure at KPMG, said: “Inflation is slowing and the mood music for the UK economy is getting more upbeat.
“But gradually increasing confidence levels are yet to translate into a notable uplift in discretionary spending, generally.
“With costs still heightened and some people still having to adjust to higher mortgage costs, the challenge for consumer spending is whether any future lowering of costs ends up being saved rather than spent.
“Over the coming weeks, retail and hospitality businesses will be hoping that purchases related to healthy summer holiday demand, combined with Euro 2024 and hopefully some sunshine, provide a stimulus for increased summer spending.”