A small but welcome rise in UK consumer confidence offers a silver lining amid a tough economic backdrop.
According to the latest GfK survey, confidence nudged up by two points in June to minus 18, a modest improvement from recent months. While still below the minus 14 level seen a year ago before the general election, it signals a slight easing of pessimism among shoppers.
"In the big scheme of things, given the chaotic performance of successive British governments in recent years, the small, two-point, improvement in the GfK measure of consumer confidence in the UK, to minus 18, is a welcome nudge in the right direction," said Shore Capital's veteran retail analyst, Clive Black.
However, he noted wryly: "That a year ago, the month prior to the General Election, the general index stood at minus 14."
Digging into the details, attitudes towards personal finances and big-ticket spending remained steady.
The boost came mainly from a better perception of the overall economic climate, both looking back and ahead.
Whether this optimism lasts is uncertain, especially with rising tensions in the Middle East pushing up oil prices, a factor that could dent household budgets and consumer mood.
For UK Chancellor Rachel Reeves, the uptick in confidence is timely, lending some support to her narrative that Labour is bringing stability to the economy.
Yet, almost every major economic forecaster, aside from the Office for Budget Responsibility, has downgraded growth prospects for 2025, underscoring the challenges ahead.
Adding to the mixed picture, official data released on 20 June showed retail sales volumes fell 2.7% year-on-year in May, the weakest performance since December 2023.
This decline follows a stronger spring period, with April benefiting from Easter and good weather, helping the three-month sales average inch up 0.8%.
However, the softer May numbers align with other recent retail indicators, such as the disappointing figures from the British Retail Consortium’s Retail Sales Monitor.
For the Chancellor, these trends are less encouraging, highlighting the fragile state of consumer spending as inflationary pressures and global uncertainties persist.
In short, while consumer confidence is showing tentative signs of improvement, retail sales data reveal a more cautious and unsettled UK consumer landscape heading into the summer.