Consumer confidence has risen to its highest level in over two years, according to GfK’s consumer confidence index. The index rose by two points to minus 17 in May, which is the highest reading since December 2021

The analysis showed that consumer confidence continues to rise, with confidence in the general economic situation over the next 12 months climbed, rising by four points to minus 17 – with this 13 points up on a year ago.

The forecast for personal finances over the next year rose by five points to seven. However, there was a slight dip in the index’s major purchase measure, indicating ongoing cost-of-living pressures. GfK client strategy director Joe Staton noted that while conditions are improving, the cost-of-living crisis remains a daily reality. 

Four out of five of the survey’s components measuring economic and personal financial confidence rose this month, with only the major purchase index having declined.

Although an improvement, the increased cost of living and higher borrowing costs are still weighing on consumer sentiment, as the index is still deeply negative and below its 2014-19 average of minus 5.3 

Joe Staton, Client Strategy Director GfK 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 (up five) and a boost for our view on the wider economy in the coming year (up four).

“The only negative in May is the slight dip in our major purchase measure (down one point to -26), 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. This good result anticipates further growth in confidence in the months to come.”

Source: Credit Connect