A fall in inflation led to a slight improvement in consumer confidence this month amid warnings of “clear challenges ahead”.
GfK’s long-running Consumer Confidence Index rose by two points in May, but is still four points lower than this time last year at minus 23.
Despite confidence in the general economy over the coming year rising five points, it remains five points lower than last May at minus 38, while confidence in personal finances over the next 12 months is up two points to minus two, four points down on a year ago.
The major purchase index, an indicator of confidence in buying big ticket items, dropped two points to minus 20, four points lower than May last year and its lowest level since last January.
Key income groups recorded “more worrying” major purchase scores, with confidence among those earning between £14,500 and £24,999 posting a 19-point drop to minus 33.
Similarly, there was a steep fall within the average household income group earning between £35,000 and £49,999, with a 10-point drop to minus 27.
Neil Bellamy, consumer insights director at GfK, said: “Consumers appear to be in a more generous mood in May, with a two-point increase in the headline score and improving perceptions of both personal finances and the wider economy.
“Clearly, for specific groups of consumers, the impact of cost-of-living pressures are acute.
“Moreover, our savings measure – down by the unusually high amount of 10 points – suggests people are diverting funds from savings accounts to pay for day-to-day expenses.
“Inflation may have fallen in April, but with price pressures expected to rise again and continued uncertainty around interest rates, it’s unlikely May marks the beginning of a sustained improvement.”
