UK Consumer Confidence and Spending Trends in August 2025

In August 2025, consumer card spending in the UK grew by just 0.5% year-on-year, a decline from 1.4% in July and lower than the Consumer Prices Index including owner occupiers' housing costs (CPIH) inflation rate of 4.2%. This stagnation in spending is attributed to rising concerns about food price inflation, with 89% of consumers expressing worries about increasing costs, particularly for essential items like meat, seafood, and dairy products.

Consumer spending in pubs sees slight rise

Despite the overall sluggish growth in consumer spending, certain sectors showed resilience. The Barclays Consumer Spend report highlighted that discretionary spending rose by 2.0%, particularly in clothing, furniture, and health and beauty sectors. Notably, furniture store spending increased by 11.6%, marking the greatest uplift since March 2022. The hospitality and leisure category also saw a 2.5% growth, driven by a surge in digital content subscriptions, buoyed by popular titles such as "KPop Demon Hunters."

Card spending grows by just 0.5 percent in August, but base rate cut helps ease pressure on personal finances

Consumer confidence in the UK economy improved significantly in August, rising to 28%, up from 22% in July. This increase was attributed to a recent base rate cut by the Bank of England, which also positively impacted confidence in household finances, reaching 73%. However, despite this rebound, the outlook for the remainder of the year remains cautious, with speculation around the upcoming budget potentially dampening consumer sentiment.

Consumer spending in pubs sees slight rise

While some analysts view the rise in consumer confidence as a positive sign, others caution against complacency. Jack Meaning, Chief UK Economist at Barclays, noted that while consumer confidence has improved, the overall economic outlook remains subdued. He emphasized that further interest rate cuts may be necessary to provide a sustained boost to the economy, especially in light of ongoing inflationary pressures.

Consumer spending in pubs sees slight rise

Dunelm, a prominent furniture retailer, reported a decline in its shares following a warning about rising costs and sluggish consumer sentiment. The company cited increased labor costs due to higher national insurance contributions and the national living wage hike as significant factors impacting its financial performance. Dunelm's pre-tax profit margins fell slightly, reflecting the challenging retail environment.

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As the UK approaches the critical holiday shopping season, the interplay between consumer confidence, inflation, and spending patterns will be crucial. Retailers are advised to remain vigilant, as the potential for tax rises and ongoing economic uncertainties could influence consumer behavior. The upcoming budget announcement will be pivotal in shaping the economic landscape for both consumers and businesses in the coming months.

Retail sales rise yet consumer confidence remains low