UK consumer confidence slipped further in March, with GfK's Consumer Confidence Index dropping two points to -21, as the Middle East conflict began to cast a shadow over household sentiment.
The headline number masked some sharper moves beneath the surface. Expectations for the general economic situation over the next twelve months fell six points to -37, while the Major Purchase Index dropped four points to -18, a sign that people are thinking twice before opening their wallets. On the other side, the Savings Index jumped six points to 27, suggesting many households are choosing to squirrel money away rather than spend it.
Neil Bellamy, consumer insights director at GfK, said the data pointed to a spreading unease. "A ripple of fear is spreading, as is evident from the six-point fall in perceptions of the general economic situation over the next 12 months, and also in the four-point drop in the Major Purchase Index. People simply do not feel the economy is robust enough to ride out the knock-on effects from the Middle East conflict."
He added that the combination of falling spending intentions and rising savings was a telling signal. "The decline in purchasing intentions, coupled with a six-point rise in the Savings Index, indicates people are holding on to their money and avoiding making major purchases while they wait to see what the medium-term impact of the conflict will be."
Bellamy also flagged two bigger concerns on the horizon. The UK, he said, will need a careful and balanced response to the volatility seen since late February. And with fears growing over sharp price rises ahead, he warned that without a swift resolution to the conflict - or fresh government support such as energy bill help - the current mood could darken considerably. "This ripple of fear we are seeing in the March data has the danger of turning into a flood," he said.