British consumer sentiment weakened to its lowest in nearly a year in March as households fretted about the potential impact of the Iran war on the economy and the possibility of sharp price rises, according to a closely watched monthly survey.
GfK’s consumer confidence index, the longest-running survey of its kind in Britain, fell to -21 in March from -19 in February. This was its lowest reading since Britons were hit by a wave of increases in household bills in April 2025 but less of a decline than economists polled by Reuters had forecast.
“People simply do not feel the economy is robust enough to ride out the knock-on effects from the Middle East conflict,” said Neil Bellamy, consumer insights director at GfK.
The sharpest drop was in households’ assessment of the general economic situation over the next 12 months, which fell by 6 points, while their view of their own personal finances was little changed from last month.
Many Britons have been feeling the impact of higher petrol prices after a 50% rise in the cost of oil since the start of the conflict at the end of February, and the government has announced limited support for poorer households reliant on heating oil.
But much of the effect will only come if the conflict lasts, as regulated household energy tariffs are capped until July.
The Bank of England forecasts inflation will rise towards 3.5% in the middle of the year, while on Thursday the OECD revised up its forecast for British inflation by more than for most other countries to show it averaging 4% this year.
The GfK survey showed a relatively modest rise in household inflation expectations to their highest since November, in contrast to one from Citi and YouGov on Tuesday which showed the biggest jump in more than 20 years.
GfK also reported a 4-point drop in households’ willingness to make major purchases and a 6-point rise in their savings rate.
“Unless there’s a swift resolution to the conflict, or government schemes such as additional support with energy bills … this ripple of fear we are seeing in the March data has the danger of turning into a flood,” Bellamy said.
(Reporting by David Milliken)
