GfK index shows modest uptick despite inflationary clouds on the horizon
Consumer confidence in the UK showed signs of recovery in May, with the latest figures from GfK’s long-running index revealing a modest increase following the resolution of April’s economic turbulence. The improvement, however, arrives amid renewed warnings that rising inflation could quickly erode any newfound optimism.
GfK’s consumer confidence index rose by three points this month, reaching minus 20. While still deep in negative territory, the increase suggests that some of the economic uncertainty that loomed in April — particularly around the so-called “Trump tariffs” — may have eased, at least temporarily.
A notable factor in the uptick was a five-point rise in consumer expectations regarding personal finances over the coming year. That measure reached a positive reading of two — its highest level since early 2024 — though it remains five points down compared to this time last year.
Similarly, the outlook for the general economic situation over the next 12 months improved by four points, climbing to minus 16. Again, this is a more positive assessment than last month but still worse than the figure recorded in May 2024.
The major purchase index, which measures consumers’ willingness to buy expensive goods such as furniture or electronics, also climbed three points to minus 16. This represents the highest reading since the end of last year and suggests growing consumer confidence in making significant financial commitments.
However, the survey was conducted in early May, prior to the release of official inflation data this Wednesday. The Consumer Prices Index (CPI) rose sharply to 3.5% in April, up from 2.6% in March, marking its highest level since January 2024. The rise was largely attributed to what economists dubbed “Awful April” — a combination of household bill increases and broader price pressures.
Neil Bellamy, Consumer Insights Director at GfK, said the timing of the survey was critical to understanding the results.
“Have consumers taken comfort from the Bank of England’s May 8 quarter-point base rate cut? And have they breathed a tiny sigh of relief since April, when the sudden turbulence of the Trump tariffs was prompting dire warnings of economic damage and a return to inflation?” he said.
“Those dangers — especially the issue of inflation — have not disappeared, but the consumer mood in the UK does appear to have improved a little.”
The so-called “Trump tariffs,” introduced in April in response to geopolitical tensions and aimed at protecting domestic industries, sparked concern across global markets and led to fears of increased costs on imported goods. Their initial impact rattled economic forecasts, but early signs suggest the UK may be weathering the storm more robustly than anticipated — for now.
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Despite the improved sentiment in May, economists caution that sustained recovery in consumer confidence remains fragile. Rising inflation, coupled with wage stagnation and uncertainty around future interest rate decisions, could dampen optimism as the year progresses.
With the Bank of England expected to monitor inflation closely before making any further decisions on rates, households across the UK may find their financial confidence tested once again in the coming months.
For now, however, May’s data provides a glimmer of hope. As the nation emerges from the economic shocks of early 2024, policymakers and consumers alike will be watching closely to see whether this positive momentum can be maintained — or whether renewed inflationary pressures will once again dominate the financial landscape.
