UK consumer confidence showed tentative signs of improvement in January as the latest BRC-Opinium sentiment index recorded a modest uptick in key measures of economic outlook and personal finances.
The British Retail Consortium (BRC) said that while spending intentions remained subdued, the overall trend suggested a cautious shift in consumer confidence that could influence retail sales patterns and strategic planning for brands and retailers in 2026.
Consumer confidence improves but spending intentions weaken
Data from the BRC-Opinium consumer sentiment index showed that optimism about the UK economy edged higher in January, with respondents’ expectations of the state of the economy rising to a net balance of -32 from -38 in December.
Personal financial confidence also improved, with the balance moving to -8 from -10, indicating that slightly fewer people expected their finances to worsen in the near term.
Despite these improvements in sentiment and personal financial confidence, planned consumer spending remained weak. Retail spending intentions fell sharply to -6 in January from +6 in December, and overall planned spending dropped to +5 from +17.
This divergence between consumer confidence and actual spending intentions reflects broader caution among households after the festive period, according to the data.
Retail chief highlights cautious backdrop for economic outlook
Helen Dickinson, chief executive of the British Retail Consortium, said the start of the year brought “hints of optimism” with a second consecutive improvement in confidence for the economy and personal finances, reaching the highest level in five months.
She noted that this gain was balanced by a significant drop in planned retail and overall spending, a trend she described as “expected as the festive season came to a close.”
Dickinson highlighted generational differences in the confidence data, pointing out that Millennials and Generation X, many of whom have children at home, showed the most pronounced fall in spending expectations.
She stressed the importance of government action to sustain momentum and rebuild confidence to levels seen in previous years.
Cost pressures and broader consumer outlook in 2026
The modest improvement in consumer confidence comes against the backdrop of persistent cost-of-living pressures, slowing retail sales growth and cautious spending behaviour across the UK.
Retail sales growth was subdued in late 2025, with weak non-food performance and cautious consumer spending reported by industry analysts.
Independent surveys and research indicate that many UK consumers remain mindful of economic risks, particularly around household costs and discretionary spending in the year ahead.
A KPMG Consumer Pulse survey showed that while a majority of people felt secure in their personal finances entering 2026, concern about the broader economic outlook continued to weigh on spending confidence.
For retailers and brands, rising consumer confidence—even if modest—could be a vital signal for planning inventory, marketing and pricing strategies.
Broader economic indicators, including inflation trends and household saving patterns, are likely to play a central role in shaping consumer behaviour as the year unfolds.
