UK consumer spending slowed in February, despite households reporting high confidence in their personal finances, as indicated by data from the British Retail Consortium (BRC) and Barclays. Total retail sales grew by 1.1% year-on-year, down from 2.6% in January, while like-for-like sales increased by 0.9% compared to 2.5% the previous month.
Barclays’ broader consumer spending data revealed annual growth decreased to 1.0% from 1.9%. While consumer confidence in household finances rose to 75%—the highest since 2015—broader economic confidence remained low at 25%, reflecting continued caution about the UK’s economic situation.
Retail Growth And Consumer Confidence
What this tells us is that although people feel better about their own money, they are not rushing to spend more. Retail growth has slowed compared to January, and even though wages have been rising faster than inflation, people are still holding back on unnecessary purchases. The fact that overall confidence in the economy remains low suggests that shoppers may feel uncertain about how things will develop in the coming months.
Spending habits give businesses and investors valuable insights into how stable or unpredictable conditions might become. Smaller increases in retail and total consumer spending can indicate hesitation, which banks and policymakers watch closely when making decisions. If consumers are cautious even when their own finances are improving, it can point to broader concerns that go beyond just personal income. Inflation, interest rates, and employment expectations all play a role in how people choose to spend—or save.
For those analysing short-term market movements, the slowing consumer growth may influence expectations for sectors linked to retail and discretionary spending. If caution persists, companies relying on strong consumer demand could see uneven performance. On the other hand, sectors focused on essentials may prove more stable if people prioritise necessities over luxury or entertainment purchases.
Impact On Investment Strategies
The figures from Barclays and the BRC show that confidence in personal finances is high, but spending does not fully reflect this optimism. This divergence suggests that people are looking beyond their immediate financial situation and considering wider uncertainties. Inflation may be easing, but energy prices, mortgage rates, and geopolitical tensions could still be weighing on decision-making. Investors who react to consumer trends will want to watch whether this hesitation continues or if spending picks up again in the weeks ahead.
With this backdrop, pricing in retail-related markets could see pressure if spending remains weaker than expected. Analysts will likely pay close attention to upcoming reports on wages, inflation updates, and central bank signals for any indications of shifts in consumer behaviour. How people respond to changing conditions will shape expectations for several industries, influencing various investment strategies.
