According to the BRC, consumer expectations for the overall economy over the next three months dropped to -40 in October, a decrease from -34 in September.
Forecasts for personal financial situations fell to -18, down from -15 the previous month, marking the second-lowest level recorded. Meanwhile, predicted personal saving also declined, moving to -9 from -7.
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Despite the negative outlook on the economy and personal finances, the period saw increased expectations for personal spending.
Anticipated retail spending rose to +15 in October, up from +5 in September, while broader personal spending climbed to +23 from +15.
This shift comes with the festive period approaching, potentially influencing spending intentions.
BRC chief executive Helen Dickinson said: “Consumer confidence in the economy dropped for the third consecutive month against a backdrop of rising inflation and ongoing geopolitical tensions. Meanwhile, sentiment about personal finances fell to the second-lowest level on record, as confidence among Gen X and Boomers tumbled after the announcements around pensions. With the festive period now falling within the three-month window, there were significant rises in spending expectations, though concerns around inflation may also be contributing to this.”
Dickinson stressed that households expect the Chancellor to address the cost-of-living challenge in the upcoming Budget. She highlighted the pressure on retailers, stating that industry tax burdens have increased by 20% in two years and called on the government to relieve costs such as employer National Insurance Contributions and business rates.
“Government must act on the tsunami of costs that have hit the industry, from employer National Insurance Contributions to business rates. A little breathing room for retailers at the Budget can mean a lot of breathing room for households,” she said.
BRC Lead Economist Harvir Dhillon has also warned that UK households face a significant squeeze on their budgets this winter due to rising inflation, but suggested the government could help alleviate the pressure by reducing business taxes in the forthcoming Budget.
Dhillon’s comments follow the latest Consumer Price Index data, which shows headline inflation rising to 3.5%, while inflation for clothing and footwear stands at 0.1%.
Dhillon said: “With Christmas around the corner, consumers will be understandably concerned by the third increase in inflation in three months. A large part of this is the sharp rise in petrol and diesel prices. The lifting of the Ofgem price cap this month will push up October’s figure when published in November, having already driven up household energy bills and likely to do so again in January. Rises in the cost of household appliances and pharmaceuticals will further squeeze household budgets. However, intense competition between supermarkets has helped hold inflation steady for consumers despite a multitude of supply chain shocks this year. This stabilitywas anchored by drops in the price of butter, coffee and potatoes, helping to ease the pressure on consumers.
“Retailers and Government are aligned on the need to tackle the high cost of living, and next week’s Budget provides a crucial opportunity to do just that. If Government can cut the cost of doing business, retailers will be in a better position to hold back price rises and increase investment in stores and jobs.”
