UK consumer confidence slips as inflation fears persist

What's happened

Shopper sentiment in Britain has worsened as households report rising living costs and concerns over energy prices amid ongoing inflation pressures. Fresh surveys show the public expects interest rates to stay high, with spending slowed across major purchases.

What's behind the headline?

Analysis

• The latest data shows consumer sentiment is deteriorating as price pressures persist, underscoring how inflation expectations are feeding into everyday decisions.
• With savings being drawn down and major purchases deferred, the outlook for near-term consumption remains subdued.
• The divergence between short-term inflation worries and financial resilience suggests policy responses could be tested if energy costs reaccelerate.

Brief:

This update confirms that Britons are adjusting to a high-cost environment, with households prioritising essentials and delaying discretionary spending as inflation remains a key concern.

How we got here

Officials and researchers have repeatedly warned that domestic price increases, energy costs, and policy shifts are shaping household budgets. Recent surveys indicate consumer confidence is sensitive to inflation signals and energy shocks, influencing spending and saving behavior.

Our analysis

The Guardian reports that the S&P Global consumer confidence index has fallen to 42.1 in May, the lowest since 2012 outside pandemic periods, driven by energy-price pressures and expectations of higher rates. The Guardian notes widespread concern over rising living costs and shrinking savings. The Independent and Reuters corroborate ongoing inflation concerns and consumer sentiment, though with different focal points on how energy costs and political dynamics are affecting perceptions. The Reuters briefing highlights May’s tentative improvement in some sentiment gauges but cautions that inflation risks persist, and official measures show inflation still above target.

Go deeper

• What impact will sustained price pressures have on household budgets this summer?
• Are policymakers expected to adjust energy support as costs stay high?
• How might consumer confidence influence near-term economic growth in the UK?

More on these topics

• United Kingdom - Country in Europe

  The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the north­western coast of the European mainland.