Consumer confidence in the UK economy has deteriorated sharply as inflation continues to squeeze household finances, according to new data from the British Retail Consortium (BRC) and Opinium. Fieldwork conducted between 8 and 11 July 2025 reveals a significant decline in public expectations for the economy and personal finances over the next three months.
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The BRC-Opinium survey shows the economic outlook index falling to -33 in July from -28 in June, while expectations for personal financial situations dropped to -7 from -5. Despite this, consumers report increased intentions to spend, with retail spending expectations rising to +3 from +2, and overall personal spending forecasts increasing to +16 from +12. Personal savings expectations improved slightly to -3 from -4.
Helen Dickinson, Chief Executive of the British Retail Consortium, commented:
'With the UK economy shrinking for the second consecutive month, it is little surprise that consumer confidence fell in July. Rising inflation, particularly for food, has put more pressure on personal finances, increasing the cost of living. This has caused spending expectations to rise, particularly for groceries, as households anticipate higher prices at the till.'
She further warned of inflationary pressures driven by government policy:
'Despite fierce competition between retailers, retail inflation has risen steadily over the last nine months as a result of the Chancellor's last Budget, which significantly increased employment costs. Further tax rises hitting the retail industry at the next Budget would likely fan the flames of inflation as retailers are forced to increase prices. The Chancellor has the opportunity to support households and high streets: the proposed business rates reforms could make the system fairer, provided government ensures that no store pays more as a result.'
The report highlights consumer spending expectations by category, showing sustained negative outlooks for discretionary goods such as fashion, electronics, and home improvements, while food and groceries remain the only category with a positive spending forecast (+27). This underscores consumers' prioritisation of essentials amidst cost-of-living pressures.
As inflation and economic uncertainty persist, retailers face the challenge of balancing rising operational costs with consumer demand in an increasingly competitive market. The BRC's data provides a critical snapshot for industry stakeholders navigating these complex conditions.
More information:
British Retail Consortium (BRC)
[email protected]
www.brc.org.uk
