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

A combination of high fuel and food prices and uncertainty about when interest rates will next be cut hit consumers' already fragile confidence, 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 per cent below the level seen in May last year.

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

Confidence in spending also took a knock during the month, with a record 65 per cent 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 the heightened uncertainty about an early cut in interest rates, is likely to be a major factor behind this."

But people still remain upbeat about the employment situation, with 51 per cent of those questioned thinking there are many jobs available - up from 47 per cent in April.

Nationwide said people's confidence in the jobs market suggested their reluctance to spend was being driven by the squeeze on incomes from higher prices, as well as the current weakness in the housing market, rather than fears over job insecurity.

It added that people's expectations for house price growth fell sharply during the month, with consumers now expecting house prices to fall by 3.5 per cent during the next six months.

However, confidence about the employment outlook helped the group's 'exceptions index' to defy the overall gloomy sentiment and increase by one point during May.



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