U.K. consumer sentiment strengthened unexpectedly in May, as Britons reported increased confidence in their personal financial situation, the wider economy, and future plans for shopping and saving, a survey showed Wednesday.
The long-running barometer of consumer confidence, conducted for the European Union's executive by market researcher GfK U.K. Ltd., rose to minus 5 in May, up 2 points from the previous month. Analysts polled by The Wall Street Journal expected that consumer confidence would decline by one point.
Continue Reading Below
As inflation accelerates, fueled by the pound's steep depreciation in the wake of the Brexit vote last year, Britons are facing a squeeze because wages are struggling to keep up with the rapid price increases.
This means that in the months ahead British shoppers are likely to rein in spending, a key driver of the U.K.'s economic growth, potentially causing the whole economy to slow. The U.K. economy already slowed more sharply than first thought in the first quarter, according to a fresh estimate last week, a warning sign on growth ahead of a national election June 8 and the start of Brexit talks with the European Union.
"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," said Joe Staton, head of market dynamics at GfK.
Write to Wiktor Szary at Wiktor.Szary@wsj.com
(END) Dow Jones Newswires
May 30, 2017 19:15 ET (23:15 GMT)