Consumers seem optimistic about Blair’s departure

The Nationwide consumer confidence index rose nine points in May, reaching its highest level in 18 months.

Confidence rose most sharply in the week that interest rates increased and Tony Blair announced his departure date from Downing Street.

The expectations index, charting people’s sentiment about their future financial situation, rose by six points to 97 in its fifth consecutive rise.

But the consumer spending index fell by five points in May leaving it marginally below its three month average.

Consumers’ expectations of future house price growth rose to a new high in May, with the expectation that prices will rise 4.5% in the next six months.

Fionnuala Earley, chief economist at Nationwide, says: ”Higher interest rates have not affected consumers’ overall confidence, but they do seem to be having an impact on their willingness to spend.

“The good weather in early May might have helped put consumers in a brighter mood but, peoples’ spending intentions responded sharply to the latest interest rate announcement.

“This may offer some comfort to the Monetary Policy Committee.”