Consumer confidence in UK improves despite ongoing cost-of-living crisis

24 May 2024 , 08:43

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People are feeling more confient about their finances and the wider economy (Image: PA Wire/PA Images)

Consumer confidence in the UK continues to rise, despite the ongoing cost-of-living crisis impacting households, according to a new survey.

The GfK's Consumer Confidence Index saw an increase of two points this May as it steadily recuperated from negative figures, standing now at minus 17. There was an increase in confidence regarding the general economic situation over the next 12 months, with a rise of four points to minus 17. This figure is comfortably higher by 13 points compared to last May.

Predictions for personal finances over the year also showed considerable growth, climbing by five points to sit positively at seven. This is a healthy lead of 15 points compared to this time the previous year.

However, there was a minor decline in the index's major purchase measure, which gives an indication of consumer confidence in buying high-value items. This measure dipped by one point to minus 26, and is trailing by two points from the same time last year, reinforcing on-going financial pressures on households due to the cost of living.

Commenting on the findings, Joe Staton, GfK client strategy director, 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."

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"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."

Lawrence Matheson