UK retail sentiment is weakening as the Middle East crisis drives uncertainty across consumer spending, retail footfall and inflation expectations, according to new industry data and expert analysis.
Figures from the British Retail Consortium (BRC) show that while retail footfall rose modestly in March, underlying confidence among both retailers and consumers remains fragile.
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The organisation said the conflict is “weighing heavily on both retailer and consumer confidence”, with further cost-of-living pressure likely to reduce store visits and discretionary spending.
Retail footfall masks fragile demand
March saw a partial recovery in UK retail footfall, offering a short-term improvement after a prolonged period of decline. Total footfall increased by 2.4% year on year, marking the first monthly growth in nearly a year.
However, analysts caution that the improvement reflects timing effects rather than a sustained recovery. Early Easter spending helped boost food sales, while non-food categories remained subdued. Wider data shows non-food sales growth of less than 1%, well below long-term averages.
Andy Sumpter, retail consultant at Sensormatic, said the March figures “mark an encouraging shift in momentum”, but added that they “need to be viewed in context”.
Retailers continue to face uneven demand. Categories such as homeware and electronics showed resilience, while clothing and footwear lagged, reflecting cautious consumer behaviour and delayed discretionary purchases.
Consumer confidence under pressure
UK consumer confidence has fallen sharply amid concerns over the economic impact of the Middle East conflict. BRC survey data shows expectations for the economy over the next three months dropped to their lowest level in over two years.
Households are increasingly delaying major purchases and building savings buffers. Around one in seven consumers reported postponing spending decisions due to uncertainty linked to the crisis.
Spending patterns reflect this caution. Travel expenditure declined, while overall consumer spending growth slowed to below 1% year on year.
Helen Dickinson, chief executive of the BRC, warned that “damage to supply chains has already been done”, with rising costs adding pressure to both retailers and households.
Inflation and geopolitical risks weigh on outlook
The Middle East crisis is feeding through to higher energy and transport costs, raising the risk of renewed inflation across the UK retail sector.
Disruption to key shipping routes and energy supplies has already pushed up fuel prices, with knock-on effects for logistics, commodities and food production. Industry data indicates that these pressures could intensify in the coming months, particularly if instability persists.
The BRC said further increases in the cost of living could reduce footfall and limit retailers’ ability to invest. It added that policy measures to ease domestic cost pressures would help businesses maintain value and in-store experience.
At a macro level, economists warn that the UK economy faces slower growth and rising inflation as energy prices increase and supply chains remain disrupted.
For retailers, the combined effect is a more cautious outlook. While short-term sales may benefit from seasonal factors, underlying UK retail confidence remains closely tied to geopolitical developments and their impact on household finances.
