Consumer Confidence Hits New Low amid Gloom over Food and Fuel Prices; Uncertainty over Interest Rates Adds to Public's Downbeat Sentiment

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Byline: Holly Williams

CONSUMER confidence fell for the eighth month in a row during May to hit a new low as gloomy economic news continued to take its toll, figures show today.

A combination of high fuel and food prices, and uncertainty about when interest rates will next be cut, further hit consumers' already fragile confidence during the month, according to Nationwide Building Society.

The downbeat sentiment led to the group's consumer confidence index falling to just 69, its lowest level since the series began in May 2004 and 30% below the level seen in May last year.

People are feeling particularly pessimistic about the economic situation, with 52% of those questioned saying they thought the current outlook was bad, compared with just 39% of people who were pessimistic about the state of the economy in April and only 17% who felt this way 12 months ago.

Unsurprisingly, confidence in spending also took a knock during the month, with a record 65% of people thinking now is a bad time to make a major purchase such as a house or car. Fionnuala Earley, Nationwide's chief economist, said: "Consumer sentiment remained gloomy in May as consumers revised their views about the current economic situation.

"Darker economic news throughout the month as fuel prices reached new highs, food prices remained elevated and uncertainty about an early cut in interest rates heightened, are likely to be major factors behind this. …