Confidence among U.K. consumers improved for the fourth month in a row in May amid signs of easing inflation, despite the squeeze on spending prompted by climbing interest rates.
Research firm GfK said its consumer-confidence barometer stood at minus 27 in May, compared with minus 30 a month earlier, matching expectations from economists polled by The Wall Street Journal.
The reading is the highest since the minus 26 registered in February 2022, but remains downbeat by historical standards, as confidence recovers from a record low of minus 49 in September. That period was marked by sky-high energy prices, as wholesale gas prices spiked in the months after Russia’s invasion of Ukraine.
“The headline score of minus 27 means we are still deep in negative territory and a long way from any ‘sunny uplands’. However, the overall trajectory this year is positive and might reflect a stronger underlying financial picture across the U.K. than many would think,” Joe Staton, clientStrategy Director at GfK, Said.
The Rise in the index was driven by consumers’ better assessment of their personal financial situation over the next 12 months, a signal that Brits are more hopeful in May about their personal finances than in April.
All other components measured by GfK, including about the U.K.’s general economic situation and propensity to make major purchases, were up in comparison to last month’s print.
While U.K. consumers have had to contend with cost-of-living pressures in recent months, inflation has steadily eased from four-decade highs in the latter stages of 2023.
Inflation was 10.1% in March, slowing from 10.4% in February, according to the most recent data from the Office of National Statistics, and the U.K. has avoided the recession predicted by many, including the Bank of England. Still, the economy only grew marginally by 0.1% in the first quarter, and further headwinds could come after the central bank ticked up its key interest rate to 4.5% from 4.25% at its last meeting earlier in May.
This story originally appeared on Marketwatch