UK consumer confidence hits three-year low

19th Oct 2026 11:37

(Sharecast News) - Consumer sentiment slumped to a three-year low in October, a closely-watched survey showed on Monday, as households continued to worry about the prospect of interest rate hikes.

The latest S&P Global consumer sentiment index came in at 41.3, down on September's 42.7 and the lowest since July 2023. The index has now fallen for three months in a row.

A majority of respondents - 57% - expect interest rates to rise, while the sub-index for household finances slumped to a 40-month low of 36.7.

Spending intentions were also weaker, while the savings index dipped to 39.6 from 40.4.

At the start of this year, the Monetary Policy Committee was widely expected to cut rates more than once this year, as persistently higher inflation finally began to near the Bank of England's long-term target of 2%.

However, the outbreak of war in the Middle East has seen global energy prices rocket and inflation once again track higher. Currently standing at 3.1%, consensus is for a further rise, to 3.4%, when the Office for National Statistics releases the latest figures later this week. The MPC has made it clear that it will hike Bank Rate if inflationary pressures continue to mount.

John Healey is due to present his first Budget since becoming Andy Burnham's chancellor next week. As well as battling sluggish economic growth, he is under pressure to relieve the cost of living while also reining in a surge in government spending and borrowing.

Maryam Baluch, economist at S&P Global Market Intelligence, said the latest slump in confidence underscored the tough environment the government was facing ahead of the fiscal event.

"Any Burnham bounce has proved short-lived, eclipsed by the impact on the the cost of living from events in the Middle East and the accompanying prospect of higher interest rates," she argued. "Healey faces the challenge of setting a Budget that will not ruffle bond market feathers while seeking to keep alive the promise that the government is serious about delivering stronger economic growth.

"With consumer spending typically a key driver of the UK economy, clearly households will need to start feeling brighter about their financial prospects and job security than we're seeing in the lead up to the Budget if hopes of stronger growth - let along 'growth in every postcode' - are to become anything more than wishful thinking."