Brits’ confidence in the economy has fallen for a fourth consecutive month amid widespread speculation about tax increases in Chancellor Rachel Reeves’ autumn budget.
A consumer sentiment monitor by the British Retail Consortium found more than half of Brits were now expecting the economy to get worse over the next three months.
Millennials were the most concerned, with their expectations for both the economy and their own finances falling by double digits in September, the BRC said.
This was partially offset by improvements for Gen Z, however, who remain the most optimistic of any generation.
The concerns are fuelled by rising prices after official data this week showed UK inflation rate was steady at 3.8% in August.
Food inflation rose for a fifth consecutive month to 5.1%, marking its highest level since January 2024. The Food & Drink Federation predicted this week it would hit 5.7% by the end of the year.
“Inflation is now one of the biggest concerns among the public,” said Helen Dickinson, CEO of the BRC.
“Worries about the budget combined with the increase in the cost of living have eroded confidence with little sign that inflation will come down soon.”
The UK boss of Aldi warned this week that food inflation could accelerate further if the government decided to increase costs for employers in its November budget.
“There is no doubt the budget does create a bit of uncertainty,” said Giles Hurley. “If you ask customers across the length and breadth of the country they would say that inflationary pressures are persistent. Inflationary challenges are just tremendously challenging.”
He added the rise in National Insurance contributions plus new packaging rules had already “rippled through to prices on the shelf edge”.
Last week, John Lewis blamed these two factors for its losses widening to £34m in the first half of the year.
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