Consumer confidence in the UK slipped to its lowest level since November as households grew more pessimistic about their personal finances and the wider economy, according to the latest survey from GfK.
An index of household sentiment compiled by GfK fell by three points to minus 19 in February, down from minus 16 in January and below analysts’ expectations of minus 15. It marks the weakest reading since the immediate aftermath of the autumn budget and underscores lingering fragility in consumer sentiment.
The survey, which questioned 2,000 Britons aged 16 and over, showed a notable deterioration in perceptions of personal finances. Households reported that they were less inclined to make major purchases and expected to save less of their monthly income. The forward-looking savings index dropped sharply by seven points to 21, reflecting growing uncertainty about income prospects and interest rate trends.
Although inflation has begun to ease, the psychological effects of the past two years of rising prices continue to weigh on consumers. After the survey was completed, data from the Office for National Statistics showed inflation falling to 3 per cent in January from 3.4 per cent in December. While this decline may have offered some reassurance, it came too late to influence February’s confidence reading.
Neil Bellamy, consumer insights director at GfK, said that even as price pressures moderate, households remain cautious. “Although the rate of inflation is easing, prices continue to rise, forcing many households to prioritise day-to-day spending over longer-term needs,” he said. “Views on the broader economy remain firmly in negative territory, with consumers anticipating only limited economic growth this year.”
The decline in confidence also came before the ONS reported that unemployment had climbed to a post-pandemic high, with youth joblessness reaching its highest level in 11 years, developments likely to reinforce caution among working-age households.
There are, however, countervailing signals. Energy regulator Ofgem recently announced that the average household energy bill will fall by £117 from April, which could provide some relief in the spring. Financial markets are also increasingly confident that the Bank of England will cut interest rates further this year, potentially easing borrowing costs for households.
Despite February’s dip, consumer confidence remains far above its record low of minus 49, reached in September 2022 in the aftermath of the Truss government’s mini budget.
Business sentiment, meanwhile, appears more upbeat. Separate data from Lloyds Bank showed optimism among firms rising by eight points to 36 per cent in February. The survey of 1,200 businesses suggested that expectations of lower interest rates and easing cost pressures may be supporting corporate confidence.
Recent economic indicators have also hinted at improved momentum. Retail sales jumped by 1.8 per cent in January, the composite purchasing managers’ index climbed to a 22-month high, and government borrowing costs have retreated from recent peaks. The FTSE 100 has continued to notch record highs, buoyed by global investor flows and resilient corporate earnings.
Attention now turns to the forthcoming economic forecasts from the Office for Budget Responsibility, due to be published alongside Rachel Reeves’s spring statement. While no major tax or spending changes are expected, the outlook for growth, inflation and public finances will shape expectations for the months ahead.
For now, however, the divergence between improving macro indicators and fragile household sentiment highlights a familiar feature of the post-pandemic recovery: economic stabilisation has yet to translate fully into renewed consumer confidence.
