Consumer confidence climbs in May as UK brushes off inflation concerns

 
Helen Cahill
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UK shoppers are still prepared to spend despite real wages falling (Source: Getty)

Consumer confidence rose in May as the UK brushed off concerns about increasing inflation and a squeeze on real incomes.

GfK's widely-followed consumer confidence index came in at minus five for May, up by two points as compared to April.

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The personal finance index, which reflects how respondents feel about their personal finances over the last year, also increased, up by one point on the month before.

Joe Staton, head of market dynamics at GfK, 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."

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In April, inflation rose sharply, increasing to an annual rate of 2.7 per cent, the highest rate since September 2013. The month before, inflation stood at 2.3 per cent.

Despite this, retail sales bounced back in April, with sales volumes growing four per cent year-on-year, according to the Office for National Statistics (ONS). The news of an Easter sales bump sent the pound above $1.30 against the US dollar for the first time since last September.

And, it seems the fall in the value of sterling has not curbed Britons' spending overseas. According to figures from the ONS, spending by British tourists actually increased in the first quarter, up by eight per cent.

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