LONDON, March 16 - British household confidence weakened in March, with S&P Global's Consumer Sentiment Index falling to 44.1 from 44.8 in February, marking the lowest reading since January 2025. The index is based on a survey conducted between March 5 and March 9.
The survey results point to growing concern among consumers in the wake of the recent outbreak of war in the Middle East. S&P Global Market Intelligence economist Maryam Baluch commented on the shift in sentiment: "A marked deterioration of consumer sentiment in March means we are seeing the first concrete signs of the war in the Middle East damaging the UK economy," she said.
According to the firm, households expressed their most pessimistic view of their financial prospects since December 2023. Respondents also reported being the wariest they have been about making big purchases in 14 months, underscoring a pullback in appetite for higher-value spending.
The Bank of England, together with private-sector economists, is monitoring how the U.S.-Israeli war with Iran might feed through to the domestic economy. A central concern is that rising global energy prices tied to the conflict could push inflation higher, which in turn could reduce consumer spending.
Those inflationary pressures have a direct connection to monetary policy timing. The survey and accompanying commentary indicate the BoE is likely to delay a previously expected interest rate cut scheduled for Thursday, reflecting caution in the face of uncertain inflation dynamics and weaker household sentiment.
For policymakers and market participants, the survey provides an early signal of the channels through which geopolitical conflict may influence domestic demand - notably via energy prices and consumer willingness to spend on large purchases. The S&P Global findings highlight the current fragility of consumer confidence and the sensitivity of household behaviour to international developments.
Summary
- Consumer Sentiment Index fell to 44.1 in March from 44.8 in February, lowest since January 2025 (survey dates March 5-9).
- Households most downbeat about finances since December 2023 and least willing to make big purchases in 14 months.
- Rising global energy prices tied to the U.S.-Israeli war with Iran threaten inflation and may delay a Bank of England rate cut expected on Thursday.
Key points
- Consumer confidence has weakened to its lowest point since early 2025, signalling potential softness in household spending.
- Energy price increases linked to the Middle East conflict are a primary channel of concern for inflation and consumer behaviour.
- Monetary policy timing is under review, with the BoE likely to postpone a planned interest rate cut.
Risks and uncertainties
- Geopolitical escalation could further elevate global energy prices, creating greater inflationary pressure and dampening consumer spending - impacting retail and consumer goods sectors.
- Persistently weak sentiment may reduce big-ticket purchases, weighing on durable goods and discretionary retail demand.
- Monetary policy responses, such as delaying rate cuts, create uncertainty for interest-sensitive sectors like housing and autos.