Consumer confidence flattens as recovery stalls despite wage growth
Consumer confidence was flat in the first quarter of the year despite high wage growth, as economic uncertainty weighs on Brits.
Overall consumer confidence rose 0.3 percentage points in the first three months of 2025, with sentiment towards the UK economy at its lowest level in over a year, according to Deloitte.
“The consumer recovery appears to have stalled despite continued strong wage growth, with uncertainty around the economy and other factors such as geopolitical tensions playing on the minds of consumers,” said Celine Fenech, consumer insight lead at Deloitte.
Consumer sentiment towards their level of debt declined, as did confidence in household income and job opportunities.
“As inflation persists, particularly on food and utilities, consumers are being more tactical in the way they spend, with a focus on essentials and looking for discounts and promotions when making purchases,” Fenech added.
Inflation was three per cent for the first three months of the year, above the Bank of England’s target rate of two per cent, which has made the Bank cautious about cutting interest rates further.
Half of consumers said that they had less money to spend this quarter compared with the previous three months.
Trouble ahead?
Chief executive of the British Retail Consortium (BRC) Helen Dickinson, warned that global economic turbulence is likely to affect confidence and spending further.
“Global uncertainties resulting from tariffs and a potential economic slowdown could reduce the appetite for shopping trips in the coming months,” Dickinson said.
Ian Stewart, chief economist at Deloitte, said that this uncertainty will make it more difficult for businesses to pass on higher wage and other costs to customers.
“A revival in consumer spending will be dependent on the jobs market holding up and inflation pressures remaining contained,” he said.