Consumer confidence in the economy is improving as conflict in the Middle East de-escalates, but higher prices continue to weigh on shoppers’ minds, according to the BRC-Opinium Consumer Sentiment Monitor.
Shopper optimism about the economy over the next three months improved to -48 in May, while consumers’ feelings about their personal finances now stand at -16, compared to -21 previously.
Shoppers expect to spend more, with anticipated personal spending on retail rising to +7, up 2ppt from April.
The proportion of consumers concerned that conflict in the Middle East could increase the price of food is up 2ppt to 82%, and 83% expect higher energy bills.
Findings in the index comes as chancellor Rachel Reeves announced a set of new measures and consumer watchdog powers this week “to protect people from unjustified price hikes”.
BRC chief executive Helen Dickinson said: “Consumer confidence, while firmly negative, saw a slight lift in May following signs of de-escalation in the Middle East.
“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.
“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.
“Energy prices are pushing up costs for retailers and their supply chains, with the government’s energy taxes and levies making up as much as 65% of business bills.
“Cutting these charges is the fastest way to ease inflation and support consumer confidence. Delay will only make the next cost of living squeeze harder for households.”
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