Consumer confidence improved slightly in May as easing tensions in the Middle East lifted expectations around the economy and household finances, although concerns over rising prices remain high, according to the latest figures from the British Retail Consortium (BRC).
The BRC-Opinium survey found expectations for the state of the economy over the next three months improved to -48 in May from -53 in April. Expectations for personal finances also strengthened, rising to -16 from -21.
Shoppers’ expectations for retail spending edged up to +7 from +5, while overall spending expectations remained unchanged at +15. Expectations around personal savings were flat at -8.
The findings come as the latest Office for National Statistics retail sales figures showed retail sales volumes fell by 0.4 per cent in April excluding fuel, highlighting cautious consumer behaviour.
The survey also showed continued concern about inflationary pressures linked to the Middle East conflict. More than four in five consumers said they expected food prices and energy bills to rise, with 82 per cent concerned about higher food prices and 83 per cent worried about increasing energy costs.
Concern over non-food price rises also increased, climbing to 74 per cent from 73 per cent in April.
“Consumer confidence, while firmly negative, saw a slight lift in May following signs of de-escalation in the Middle East,” Helen Dickinson, BRC chief executive, said.
“Younger consumers drove this improvement in expectations for the economy and household finances, helped by rising real wages among this generation. But the outlook remains fragile: inflation is set to rise, and more than four in five people expect food prices to climb.”
Dickinson urged the government to take action to ease pressure on businesses and households by cutting energy-related taxes and levies, which she said accounted for as much as 65 per cent of retailers’ business energy bills.
“If the government wants to keep consumer confidence heading in the right direction, it must now make a choice: act now, or let these inflationary pressures spiral, pushing up prices for households,” she said.
She added that delaying action risked intensifying the next cost-of-living squeeze for consumers.
Meanwhile, chancellor Rachel Reeves on Thursday announced measures aimed at lowering the cost of living for consumers over the school summer holidays and supporting industries hit by the fallout from the Iran war.
The measures include the suspension of import tariffs on dozens of types of food products including biscuits, chocolate and nuts.
"I met with supermarkets to urge them to do all they can to keep prices low," Reeves said after a row over whether retailers would face price caps on key goods.
"I expect supermarkets to pass these savings (from tariff reductions) on in full to their customers."
She said the measures would be paid for by an acceleration of planned changes to the way that Britain taxes international oil and gas groups.
The government said on Wednesday that a cut in fuel duty for transport, which had been due to expire in September, would be extended to the end of the year, alongside other measures to help hauliers and drivers. The government also announced a new "anti-profiteering" framework, giving the Competition and Markets Authority and other regulators stronger powers to crack down on companies found to have raised prices unfairly during crises.