Britain's Retail Slump Deepens After Fuel Costs Rise and Consumer Confidence Suffers Biggest Fall Since COVID

British retail sales fell more sharply than expected in September, and shoppers' confidence then saw its steepest monthly drop since the early stages of the COVID-19 pandemic.

Sales volumes in Great Britain dropped 0.4 per cent, according to the Office for National Statistics, against economists' forecasts of a 0.1 per cent fall. Fuel volumes rose even as prices climbed further, while unseasonably warm weather weighed on sales of autumn and winter clothing.

A separate survey, conducted in October after the sales period, showed consumer confidence plunging 11 points ahead of Chancellor John Healey's Budget next week.

Sales Fall More Than Expected as Households Pull Back

Retail sales volumes fell 0.4 per cent in September, a bigger drop than the 0.1 per cent decline forecast by economists polled by Reuters, Reuters reported on Friday 23 October 2026.

Total retail spending, online and in-store combined, still rose 0.3 per cent over the month in cash terms, according to the ONS figures reported by Retail Insight Network.

The quarterly figures offered a more positive picture. Volumes rose 0.7 per cent over the three months to September compared with the previous quarter, and were 0.8 per cent higher than in September 2025. The ONS also revised August's growth up to 0.7 per cent from an initial estimate of 0.5 per cent.

The ONS cautioned that monthly changes can be volatile and should be read alongside the three-month trend.

Fuel, Weather and Food Shift Shopping Patterns

Automotive fuel sales volumes rose 2.2 per cent from August despite further price increases, Reuters reported. The ONS said fuel sales in each month of the third quarter exceeded every month of the second.

Clothing was a weak spot. Non-food store volumes fell 0.4 per cent, with clothing and footwear softer, as online clothing retailers blamed warm weather for poor sales of autumn and winter ranges.

Supermarkets also had a weaker month. Food store volumes slipped back slightly below June levels after gains in July and August, though they still rose across the quarter as a whole.

Online sales values fell 0.4 per cent in September after a 3 per cent rise in August, but were up 6.8 per cent on a year earlier. Online accounted for 28.8 per cent of all retail spending, down slightly from 28.9 per cent in August.

'Demand hasn't disappeared, but consumers increasingly need a compelling reason to spend,' said Nicholas Found of Retail Economics, who described 'a clear softening in retail momentum'. In his view, the weather, fuel and household costs, and the approach of Black Friday and the budget were all making shoppers hold back.

Sean Douglas of PayPal UK pointed to the company's data on overseas buyers. 'What our own data shows is that domestic demand is only part of the picture,' he said, according to Retail Insight Network.

Confidence Sees Sharpest Drop Since 2020

The retail figures were followed by a bleak reading of household sentiment. The GfK Consumer Confidence Index fell 11 points to minus 24 in October, NielsenIQ, which runs the survey, said. It was the sharpest monthly fall since the early stages of the pandemic, when the index dropped 25 points in April 2020. The last fall of 11 points came in July 2016, after the Brexit vote.

Neil Bellamy, consumer insights director at GfK, called it 'an extraordinary collapse in consumer confidence in October'. Every measure in the index fell. Expectations for the general economy over the next 12 months dropped 14 points to minus 36, and the Major Purchase Index, which tracks appetite for big-ticket items, also fell 14 points to minus 22.

Views of personal finances weakened too. The measure for the next 12 months fell 8 points to minus 3, and the measure for the past year fell 7 points to minus 10. The Savings Index, which is not included in the headline score, edged up 1 point to plus 28.

The reading was below every forecast in a Reuters poll and the lowest since April, Reuters reported. GfK said no single factor explained the slump, pointing to rising inflation, the conflict in the Middle East and a broader squeeze on household budgets. Consumers' inflation expectations rose to their highest level since April.

The survey of 2,003 adults was carried out between 1 and 14 October.

Retail Gloom Contrasts With Big Chains' Outlook

The gloom contrasts with results from some of the sector's biggest names. Several big retailers have nonetheless raised their profit forecasts this year, including Tesco, Sainsbury's, Greggs and Kingfisher, according to Reuters. But major chains have warned of tough trading ahead of next week's budget and flagged signs of further inflationary pressure in 2027.

Chancellor John Healey, who delivers his budget on Wednesday 28 October, has said he wants to give households and businesses 'breathing space'. Reuters reported that the Bank of England is expected to raise interest rates next month, and that the rise in inflation expectations may add to its concerns.

Other surveys from S&P Global and LSEG/Ipsos also showed weaker sentiment in October.

Consumers and retailers will be watching next week's budget for measures that could ease pressure on household finances.