By Andy Bruce
(Reuters) – British consumer confidence rose in May to its highest in nearly two-and-a-half years, helped by households’ optimism about their personal finances, according to a survey conducted before Prime Minister Rishi Sunak’s election announcement.
Friday’s GfK Consumer Confidence Index rose in May by two points to -17, its highest reading since December 2021. A Reuters poll of economists had pointed to a reading of -18.
The survey, which has been running since 1974 and is not adjusted for seasonal variations, has a strong tendency to rise each May. Nonetheless, the improvement will be welcomed by Sunak as he tries to tempt voters back to his Conservatives ahead of a national election on July 4.
Four out of five of the survey’s components measuring economic and personal financial confidence rose this month. Only the major purchase index declined.
“All in all, consumers are clearly sensing that conditions are improving. This good result anticipates further growth in confidence in the months to come,” Joe Staton, client strategy director at GfK, said.
Inflation fell to its lowest rate since mid-2021 at 2.3% in April, although the drop was smaller than economists had expected. April also brought a nearly 10% increase in Britain’s minimum wage as well as a 2 percentage point cut in the rate of national insurance contributions paid by employees.
“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,” Staton said.
GfK conducted its survey of 2,009 people between May 1 and May 15.
(Reporting by Andy Bruce; editing by David Milliken)
