Great expectations as consumer confidence continues to recover

Consumer confidence has improved for the fourth month in a row after hitting record lows during the cost of living crisis, although the overall picture remains relatively bleak.

According to GfK’s Consumer Confidence Index, figures for May rose by three points to minus 27 after slumping to minus 45 in January. The latest reading is the highest since February 2022, just before the war in Ukraine sent energy prices soaring.

All measures used to calculate the overall figure were up in comparison to last month’s announcement.

Joe Staton, Client Strategy Director GfK, says that the cost-of-living crisis has been part of our daily financial reality for a long time, with double-digit inflation and record-high food prices.

"But despite those pressures, May sees an encouraging three-point uptick in consumer confidence. This is the fourth monthly increase in a row from January’s score of -45. While Brits have little control over the general economy, it’s good to see further improvement in how people view their personal finances in the next 12 months with a robust five-point jump to -8.

"This measure most keenly reflects our hopes and fears for the coming year, and it underpins our ability to spend on goods and services that drive our economy. Of course, the headline score of -27 means we’re still deep in negative territory and a long way from any ‘sunny uplands’.

"However, the overall trajectory this year is positive and might reflect a stronger underlying financial picture across the UK than many would think. But everybody must hold on tight as it could still be a rocky ride out of these tough times.”

The index measuring changes in personal finances during the last 12 months is up one point at -20; this is two points better than May 2022.

The forecast for personal finances over the next 12 months increased five points to -8, which is 17 points higher than this time last year.

The measure for the general economic situation of the country during the last 12 months is up one point at -54; this is nine points higher than in May 2022.

Expectations for the general economic situation over the next 12 months have increased by four points to -30; this is 26 points better than May 2022. TheMajor Purchase Index is up four points to -24; this is 11 points higher than this month last year. The Savings Index is unchanged this month at +19; this is nine points higher than this time last year, states the GfK report.