Consumer confidence picks up in May despite inflation

According to the latest figures from GfK’s confidence barometer, overall consumer confidence in May increased two points to -5.

Four of the five measures on the index increased, as consumers reported increased confidence in their personal financial situation, the wider economy, and plans for shopping and saving.

One measure – confidence in the general economic situation over the next 12 months – remained unchanged.

GfK head of market dynamics Joe Staton said: “Despite life becoming more expensive with inflation hitting its highest level in four years, and wages dropping in real terms for the first time in three years, stagnant living standards haven’t yet significantly dented consumers’ spirits.

“When it comes to retail therapy we remain happy to splash the cash as sales jump ahead of expectations.

‘Pay the piper’

Although the overall score is “bumping along in negative territory”, GfK said it has not witnessed any significant fall of the kind it might expect during such periods of pre-election and pre-Brexit uncertainty.

“Perhaps the real squeeze in living standards is yet to hit home,” Staton warned.

“After years of people paying off debts post-downturn, unsecured borrowing has steadily increased since 2014, reaching record highs this month. When will we get our comeuppance and realise we have to ‘pay the piper’?”