The British Retail Consortium’s latest survey reveals a deepening sense of unease among UK consumers, with confidence in the broader economy dropping for the third month running. According to the BRC, the overall economic outlook index fell to -40 in October, down from -34 in September, as rising inflation and ongoing geopolitical tensions continued to weigh on household sentiment.
Forecasts for personal financial situations also worsened, slipping to -18 from -15 the previous month — the second-lowest level ever recorded in the survey. Predicted personal savings declined as well, moving to -9 from -7, pointing to a household sector increasingly stretched under financial pressure.
Spending Expectations Rise Despite Broader Gloom
Despite the deteriorating outlook on the economy and personal finances, there was a notable uptick in spending expectations. Anticipated retail spending climbed to +15 in October from +5 in September, while broader personal spending expectations rose to +23 from +15. The approaching festive season appears to be influencing near-term spending intentions, even as concerns around the cost of living remain front and centre.
BRC Chief Executive Helen Dickinson acknowledged this contrast directly, noting that while sentiment around personal finances fell to near-record lows — particularly among Gen X and Baby Boomers following announcements related to pensions — the arrival of the Christmas period within the three-month survey window helped push spending expectations significantly higher. She also pointed out that concerns around rising inflation may themselves be contributing to that uptick, as households look to purchase ahead of further price increases.
Dickinson was clear about the expectations placed on the government: households are looking to the Chancellor to address the cost-of-living challenge in the upcoming Budget. She highlighted that the tax burden on the retail industry has risen by 20% over the past two years and made a direct call for relief on employer National Insurance Contributions and business rates.
“Government must act on the tsunami of costs that have hit the industry, from employer National Insurance Contributions to business rates. A little breathing room for retailers at the Budget can mean a lot of breathing room for households,” Dickinson said.
Inflation at 3.5% Raises Winter Budget Concerns
BRC Lead Economist Harvir Dhillon added his voice to those raising the alarm over the financial strain facing UK households this winter. His comments follow the release of the latest Consumer Price Index data, which shows headline inflation rising to 3.5%, with clothing and footwear inflation holding at a comparatively modest 0.1%.
Dhillon pointed to a sharp rise in petrol and diesel prices as a key driver of the latest inflation increase — the third consecutive monthly rise. He also flagged the lifting of the Ofgem energy price cap, which he warned would push October’s inflation figure higher when published in November, having already pushed up household energy bills with further increases expected in January. Rising costs for household appliances and pharmaceuticals were cited as additional pressures set to squeeze budgets further.
However, Dhillon noted a degree of resilience in the food sector, where intense competition among supermarkets has helped keep food inflation relatively stable despite multiple supply chain disruptions throughout the year. Falls in the price of butter, coffee, and potatoes were highlighted as factors that have helped ease some pressure on consumers.
A Budget Opportunity to Ease Cost-of-Living Pressure
On the policy front, Dhillon positioned the upcoming Budget as a meaningful opportunity for the government to act. He argued that retailers and government share a common interest in tackling the high cost of living, and that reducing the cost of doing business would directly benefit consumers — enabling retailers to hold back price rises and invest more in stores and jobs.
The broader message from the BRC is consistent: UK consumer confidence is under sustained pressure from rising inflation, strained personal finances, and a cumulative tax burden that the retail sector says has become unsustainable. With the Budget fast approaching, industry leaders are watching closely for measures that could offer relief — both to businesses navigating a difficult trading environment and to the households they serve.
