Consumer confidence falls amid inflation fears

Consumer sentiment has dropped sharply since the conflict in the Middle East escalated, according to a survey by Barclays.

The survey found that around 80% of consumers are concerned that the conflict will increase inflation and energy costs. Nearly half of the respondents said they had already started adjusting their spending behaviour.

The data showed that confidence in the economy dipped two percentage points last week to 23 per cent, down from 25 per cent at the end of February. While confidence remains constrained, for the first time since July 2025, a greater proportion of consumers report feeling more confident in the strength of the UK economy than the global economy.

Four in five (82 per cent) are concerned about the impact of tensions in the Middle East on fuel costs, energy bills (81 per cent) and inflation (78 per cent). Food prices (76 per cent), supply chain disruption (70 per cent), economic slowdown (69 per cent) and travel disruption (56 per cent) are also areas of concern. A further three in five (59 per cent) cite the potential negative impact on their household finances.

Almost half (46 per cent) are taking action in response, including making the effort to cut energy consumption (16 per cent), reducing discretionary spending (13 per cent), building up a savings buffer (10 per cent) and delaying major spending decisions (10 per cent). A further one in 10 (9 per cent) are reconsidering upcoming travel plans.

Consumer card spending increased just 1.0 per cent in February – a rise from 0.8 per cent in January but less than the latest CPIH inflation rate of 3.2 per cent. Essential spend declined -0.6 per cent, but growth in non-essential spending reached a six month-high at 1.8 per cent. Within retail; clothing (3.7 per cent), general retailers and marketplaces (4.6 per cent) and pharmacy, health & beauty (6.4 per cent) all remained in growth.

Growth in spending on digital content & subscriptions reached its highest level since August 2021, at 12.2 per cent, driven by streamflation, popular series such as ‘Love Story’ and ‘Bridgerton’, and the rise of emerging premium subscriptions, such as AI and fitness apps. Meanwhile entertainment grew 9.9 per cent in February, an 11-month high, with live shows & concerts the greatest contributor, increasing 14.0 per cent. Transactions peaked on 30th January, when tickets to Harry Styles’ sell-out ‘Together, Together Tour’ went on sale, once again demonstrating the value consumers place in investing in memorable experiences.

As consumer caution continues, essential spend fell by -0.6 per cent, with 63 per cent seeking ways to cut the cost of their weekly shop. One in three (33 per cent) say they always avoid paying full price, and 24 per cent reportedly get a “thrill” from finding a discount. Three in 10 (30 per cent) happily switch brands to obtain better value, while 29 per cent try to maximise loyalty points obtained from travel miles and rewards programmes.

The overall eating & drinking category increased 2.4 per cent in February, with restaurants, cafes & bakeries up 2.9 per cent and bars, pubs & clubs up 3.3 per cent. Takeaways saw less of an uplift, at 1.3 per cent, as 23 per cent say they’re cutting their consumption of fast food and takeaways in an attempt to be healthier. One in three (33 per cent) say health and fitness is a top spending priority for them this year, and 53 per cent overall report focusing more on their wellbeing.

This comes as one in five (19 per cent) say they would like to see more nutritionally-dense meals and snacks made available, while a similar proportion (20 per cent) have noticed more GLP-1-friendly options being advertised. However 49 per cent say they’re confused about the meaning of “GLP-1-friendly” on food packaging, and 44 per cent see these smaller portioned products as a poor value for money.

Jack Meaning, Chief UK Economist at Barclays said “This timely insight into consumers’ reaction to the evolving situation in the Middle East highlights perfectly the economic risks for the UK if the conflict doesn’t find a way to de-escalate in short order. The start of 2026 had brought positive signs of growth and improving consumer sentiment. A new, prolonged, bout of uncertainty risks snuffing that out before it has had a chance to really get going.”

Karen Johnson, Head of Retail at Barclays, said “February’s data highlights the careful balancing act shoppers face in navigating rising costs amidst global uncertainty. While we’re seeing a continued appetite to spend on categories such as entertainment and wellness – obtaining value for money and savvy spending will remain a strong focus in the months ahead.”

Overall growth figures

	Spend Growth	Transaction Growth
Essential	-0.6%	-1.5%
Non Essential	1.8%	2.1%
OVERALL	1.0%	0.7%
Retail	1.3%	1.0%
Clothing	3.7%	7.0%
Grocery	0.7%	-0.6%
Supermarkets	0.1%	-2.0%
Food & Drink Specialist	6.1%	7.4%
Household	-2.9%	0.7%
Home Improvements & DIY	-3.1%	-5.6%
Electronics	-5.8%	4.8%
Furniture Stores	0.5%	1.4%
Garden Centres	-1.1%	1.4%
General Retailers	2.8%	3.8%
General Retailers & Marketplaces	4.6%	6.5%
Department Stores	-1.9%	0.5%
Discount & Rewards	-1.6%	-4.7%
Specialist Retailers	4.6%	0.7%
Pharmacy, Health & Beauty	6.4%	-0.2%
Sports & Outdoor	-3.4%	-4.3%
Other Specialist Retailers	6.1%	2.9%
Hospitality & Leisure	3.6%	0.7%
Digital Content & Subscription	12.2%	6.6%
Eating & Drinking	2.4%	-1.8%
Restaurants, Cafes & Bakeries	2.9%	0.0%
Bars, Pubs & Clubs	3.3%	2.2%
Takeaways and Fast Food	1.3%	-5.9%
Entertainment	9.9%	9.2%
Hotels, Resorts & Accommodation	1.0%	-3.2%
Travel	1.9%	-0.5%
Travel Agents	7.0%	16.1%
Airlines	-6.9%	-5.1%
Public Transport	-0.1%	-3.9%
Other Travel	4.6%	5.1%
Other	-3.7%	-0.6%
Fuel	-7.3%	-5.2%
Motoring	-3.5%	6.8%
Other Services	-2.1%	-0.3%
Insperiences	4.1%	-3.5%
Online	1.8%	4.8%
Face-to-Face	0.3%	-1.2%