Nationwide Building Society has reported a fall in consumer confidence during May.

Its main consumer confidence Index fell by three points in May to 41 and is just four points above its lowest ever level of 37 in October 2011.

The main index is more than 34 points below its long run average and it sits at its lowest level so far this year. Furthermore, the index sits 16 points lower than this time last year.

On the whole consumers continue to remain cautious about making major purchases, even though the spending index increased by two points to 77.

“It is not surprising that confidence remains fragile, given that the UK economy slipped back into recession in the first three months of the year, with few signs of improvement in Q2,” said Robert Gardner, Nationwide’s chief economist.

“There was some positive news for households in recent months, with labour market conditions appearing to stabilise and inflation dropping from 3.5% to 3%, easing the squeeze on household budgets, though this was clearly not enough to lift spirits.

“While there is potential for the Olympics to deliver a boost to sentiment and activity later in the summer, developments in the Eurozone are likely to be the key factor determining the trajectory of sentiment and activity in the quarters ahead.”