Consumer confidence in the UK retail sector improved modestly in May, but concerns over inflation and rising food prices continue to shape shopping behaviour, according to new data from the British Retail Consortium and research firm Opinium.
The latest BRC-Opinium Consumer Sentiment Monitor showed expectations for the UK economy over the next three months rose to -48 in May from -53 in April. Personal finance expectations also improved, moving to -16 from -21.
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Consumers said they expected to spend slightly more on retail purchases, particularly on essential goods.
The findings reflect continuing pressure on household budgets as inflation, energy costs and food prices remain high across the UK retail market.
Search interest around “cost of living”, “food inflation” and “consumer confidence” has remained strong in recent months as retailers and suppliers track shifts in spending behaviour.
Grocery spending remains the priority
The BRC data suggests consumers are still prioritising grocery and essential spending over discretionary purchases such as fashion, homeware and leisure products.
Helen Dickinson, chief executive of the BRC, said confidence had “seen a slight lift in May” following signs of easing tensions in the Middle East. She added that younger consumers were more optimistic because of “rising real wages”.
Despite the improvement, Dickinson warned that the overall outlook “remains fragile”. More than four in five consumers expect food prices to rise further in the coming months, according to separate BRC polling.
Retailers are already reporting cautious customer behaviour. Industry data published earlier this year showed consumers cutting back on non-essential spending while focusing more heavily on household staples and food purchases.
The pattern is creating mixed trading conditions across the retail sector. Grocery categories continue to perform more steadily than non-food segments, where demand remains weaker.
Inflation pressures continue
Although UK shop price inflation slowed earlier this year, retailers and analysts say underlying cost pressures remain significant.
The BRC’s latest shop price monitor found annual shop price inflation eased to 1.1% in February, helped by strong retail competition and discounting activity. Food inflation also slowed to 3.5%, while non-food prices edged down slightly.
Retailers used promotions across fashion, beauty and seasonal products to encourage spending during the spring trading period. Reuters reported that Easter discounting also helped slow price growth in April.
Dickinson said retailers were “doing all they can to keep prices down”, but warned that higher energy bills, taxes and regulation continued to increase operating costs.
The BRC has also highlighted the impact of rising gas and electricity prices across supply chains, including manufacturing, transport and food production.
Industry analysts say the current slowdown in retail inflation may prove temporary if global energy markets remain volatile.
Retailers face uncertain demand
For retailers, the latest consumer confidence figures point to a market that remains highly price-sensitive.
Research published by the Confederation of British Industry recently showed UK retail sales volumes recorded one of their sharpest declines in decades as shoppers reduced discretionary purchases.
Retail footfall data has also weakened in recent months, particularly in shopping centres and high streets.
Mike Watkins, head of retailer and business insight at NIQ, said “competitive pricing” across food and non-food retail channels was helping to reduce inflation pressures. However, he noted that weak consumer sentiment continued to make demand “unpredictable for retailers”.
The BRC said future consumer confidence will depend heavily on inflation trends and government policy decisions linked to business costs and energy prices. Dickinson warned that delaying action on retail energy costs could make “the next cost of living squeeze harder for households”.
