Consumer confidence saw a slight improvement this month following signs of de-escalation in the Middle East, figures suggest.
Confidence in the economy over the next three months remains firmly in negative territory at minus 48, but up from minus 53 last month, according to British Retail Consortium (BRC) and Opinium data.
Confidence in personal finances also rose slightly from minus 21 in April to minus 16.
However, the proportion of people concerned that conflict in the Middle East could increase food prices rose to 82% in May, up from 80% last month, while 83% are now concerned about the crisis leading to higher energy bills, up from 81%.
The survey was taken ahead of latest predictions that Ofgem’s next price cap will rise by £209 a year from July amid the fallout of the Iran war, with experts warning over an impending payment shock from the autumn as demand surges in the cooler months.
Cornwall Insight said its prediction for Ofgem’s cap from July to September now stands at £1,850 for a typical dual fuel household, an increase of 13% on April’s £1,641 annual cap.
This is slightly higher than the 12% increase it forecast last month.
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.”
She added: “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.”
