UK consumer confidence dips for first time since Q3 2022, but June fashion spending leads

Fashion Network

21-07-2025

Already fragile, UK consumer confidence has fallen to its lowest level for a year, down 2.6 percentage points in the second quarter of 2025, according to the latest figures from Deloitte.
It's the lowest confidence level since Q1 2024 and the first marked decline in since October 2022, when inflation peaked at its highest rate in 40 years, the report showed.
There was, however, one bright spot to the report that showed 'significant boosts' to discretionary spending were led by clothing and footwear (+6.6 percentage points) as the important summer holiday period kicked into gear.
But back to that worrisome confidence dip, driven by a decline in all six measures of confidence in the Deloitte Consumer Tracker index, which is based on responses from 3,200 UK consumers aged 18+ between 13-16 June.
Sentiment towards job security saw the biggest decline (-4.8 percentage points) as well as confidence about job opportunities and career progression (-3.9 percentage points) following the increase in employer costs and weakening of the labour market.
Consumers' confidence about their level of debt also fell (-3.7 percentage points), although remains above levels seen at the same time a year ago, the report said.
However, confidence towards the state of the UK economy, not included in the main confidence index, improved by 3.9 percentage points. However, it remains a significant 18.4 percentage points lower than the same period a year ago.
Spending remained relatively subdued in the second quarter. While essential spending dropped by 4.6 percentage points due to the seasonality of lower utility bills, this only translated into a marginal 1.5 percentage point uptick in discretionary spending.
Céline Fenech, consumer insight lead at Deloitte, said: 'For the last few years we have seen consumer confidence remain relatively resilient despite several economic challenges, geopolitical uncertainty, and the increased cost of living. After recovering from its lowest level on record in the third quarter of 2022, when inflation peaked to a historic high, our consumer confidence index has declined for the first time in almost three years.
'This drop in confidence signals a weakening of consumers' resilience, as concerns of a slowing labour market have left consumers worried about job security and income growth prospects, while persistent inflation and a high cost of living have negatively impacted sentiment towards personal debt.'
However, she added: 'We have seen how the mood of the consumer can change and adapt to new circumstances. If an uptick in both economic growth and business sentiment reduces pressures on the job market and on earnings, a return to positive confidence could still be on the cards.'
Ian Stewart, chief economist at Deloitte, added: 'Higher inflation – which is well above levels in the US and EU – coupled with a weaker jobs market is weighing on consumer sentiment. The UK is unlikely to see inflation returning to the 2% rate that prevailed last summer until well into 2026, so the UK consumer will have to navigate several months of uncomfortably high inflation.'