Britain’s retail mood darkens as inflation bites

Consumer confidence in the UK slipped further in September, with fashion and retail sectors feeling the blunt of swelling cost pressures. According to recent BRC-Opinium data, optimism about the economy deteriorated: expectations for its state over the next three months dropped to -36, from -32 in August. Personal financial outlook also edged down to -7 (from -6).

Yet where households are most strained, behaviour exhibits nuance. Intentions to spend on retail in September rose modestly to +5 (from +4), even as overall personal spending expectations fell slightly to +14 (down from +16). Savings expectations collapsed to zero.

Helen Dickinson, CEO of the British Retail Consortium, highlighted a pronounced generational split: Millennials revised down both economic and financial expectations by double digits, while Gen Z remained more sanguine, softening the broader decline. Inflation, especially in food, looms large. Food inflation is forecast to climb to 6 per cent by year-end.

Fashion’s tightrope

From a style-and-commerce perspective, these figures are significant. Fashion is one of the first discretionary sectors to feel the squeeze when confidence falls, yet the bump in retail spending intention suggests a residual appetite—especially for accessible, trend-led, value propositions. The rise in grocery and food-price inflation to around 4.9 percent already undermines household budgets.

High-street brands, especially in fast fashion and accessible luxury, are thus walking a tightrope: balancing inflation-driven input costs, labour and energy pressures with consumers who remain willing to spend, but more selectively. Signature pieces, collaborations, discount promotions and “treat-yourself” moments may gain relative prominence over full-price staples.

Dickinson and others argue that much now depends on what the Chancellor delivers in the upcoming Autumn Budget (scheduled 26 November). Key asks include meaningful relief via business rates, and policy that does not worsen costs for retailers already working flat margins

Inflation remains sticky: headline inflation in recent months hovers near 3.8 percent, with food inflation one of the biggest pressures. Retailers warn of further price hikes unless tax and wage burdens are mitigated.

For fashion, September’s data points to an inflection rather than a collapse. Confidence is weak, inflation persistent, and spending cautious. But there is still room for brands and designers that read the room: value-laden strategies, creativity in offers, and curated desirability can allow some parts of the market to outrun the downtrend.