‘Ripple of fear’ hits consumer confidence as UK braces for G7-leading inflation

Consumer confidence hit its lowest threshold in nearly a year this month, down -21 from -19 in February.

The decline was driven by rising concerns about the general economy over the next 12 months, which slid by six points month-on-month to -37 while people’s view on their personal finances over the preceding year held steady at -7.

“People simply do not feel the ⁠economy is robust enough to ride out the knock-on effects from the Middle East ​conflict,” said Neil Bellamy, consumer insights director at GfK.

Sentiment around making major purchases registered a four point decline month-on-month, while the consumers’ savings rate climbed six points.

The US-Israeli war on Iran could also trigger a recession in the UK – which is set to be the hardest hit by inflation among all G7 nations except the US.

Meanwhile, the Organisation for Economic Co-operation and Development (OECD) has forecast that inflation across the UK will rise to 4% in 2026 and has cut its projections for UK GDP growth to 0.7%, down from its previous forecast of 1.2%.

The industry body warned that prolonged conflict could trigger “significant energy shortages” globally, while delayed fertiliser freight could also push up food prices worldwide.

Hospitality operators, many of which will be facing fixed contract renewals on their energy packages come April, are staring down the barrel of more increased costs amid declining consumer confidence.

UKHospitality chair Kate Nicholls said: “The recent hikes to energy prices are extremely worrying. I know there are many operators that have already been impacted, particularly those that have fixed contracts ending or rely on heating oil.” 

You can read The Caterer’s analysis on the impact of the Iran war on hospitality here.