UK consumer confidence sees biggest monthly drop since lockdown

UK future consumer sentiment, as measured by GlobalData, fell by 8.2 points in March. This was the deepest drop seen since the start of the first UK Covid lockdown six years ago.

The fall comes after the war in the Middle East sent oil prices above $100 a barrel at points, with rising gas prices also leading to fears about a spike in inflation and dashing hopes of an interest rate cut when the Bank of England meet this week.

Almost half of UK consumers said they expect higher interest rates this year. Data from Moneyfacts showed that the average mortgage price was now £800 a year higher than before the war started.

“The significant fall in consumer confidence will be a real concern for UK retailers who have faced years of challenges post-Covid and will have been hoping to see consumer sentiment rise in 2026,” said Sofie Willmott, associate director of retail at GlobalData.

“Uncertainty around the economy and their personal finances is likely to lead consumers to pull back on discretionary spending causing more pain for struggling non-food retailers.”

Inflation had been on a downward trajectory since last summer, with annual price rises of 3.2% in January.

In a forecast prepared before the conflict, the Office for Budget Responsibility said it was expecting it to fall to 2.3% over the course of the year.

Those forecasts are likely to have gone out the window. Economists at RSM UK have said annual price rises could hit 5% if oil prices remain elevated. 

“Weak consumer confidence in 2026 will hinder retail spending and while some level of uncertainty remains, shoppers are likely to focus their buying on essential products like groceries and health & beauty items,” said Willmott.