British consumer confidence has fallen for the third consecutive month, signaling growing anxiety over the economic impact of the Iran war and rising inflation. The GfK Consumer Confidence Index dropped by four points to -25 in April, its lowest level since October 2023. This decline follows a two-point drop in March and a three-point fall in February.
Worsening Economic Outlook
The overall decline was driven by a sharp deterioration in perceptions of the UK's economic performance over the past year, which fell by eight points to -51. Expectations for the economy over the next 12 months also worsened, dropping six points to -43. Britons' views on their personal financial situation over the past year and the coming year both declined, by four and five points respectively. The only bright spot was the savings index, which rose five points to 32, indicating that households are stockpiling cash to weather the storm.
Expert Analysis
Neil Bellamy, director of consumer insights at GfK, commented: "Everyone is grappling with rapid price rises, especially at the fuel pumps, which are taking a dent out of household budgets, and people know further price hikes are coming. While the Gulf crisis is intensifying pressures, much of the current strain reflects earlier domestic cost increases. How long can all this disruption and pain continue?"
Impact on Summer Holidays and Spending
Susannah Streeter, chief investment strategist at Wealth Club, noted that Britons are bracing for tough times ahead, with a potential jet fuel shortage threatening summer holidays. Leading British airlines have written to the government urging the suspension of environmental regulations and tax cuts on flying to mitigate higher costs. German airline Lufthansa has already cut 20,000 flights due to fuel shortages. Streeter added: "Inflation has already started marching higher again, and shoppers are becoming wary about spending on non-essential items."
On Thursday, the boss of Sainsbury's acknowledged that the Iran war will "undoubtedly" pressure food prices, with industry bodies warning of double-digit food inflation. The combination of rising fuel costs, higher food prices, and uncertainty over holidays is weighing heavily on consumer sentiment.
