Consumer confidence fell by 2.6 percentage points in the second quarter of 2025, representing the first marked decline in confidence since October 2022, when inflation peaked at its highest rate in 40 years, and the lowest confidence level since the first quarter of 2024.
This was driven by a decline in all six measures of confidence in the Deloitte Consumer Tracker index. Sentiment towards job security saw the biggest decline (-4.8 percentage points) as well as consumer confidence about job opportunities and career progression (-3.9 percentage points) following the increase in employer costs and weakening of the labour market. Consumers’ confidence about their level of debt also fell 3.7 percentage points, although it remains above levels seen at the same time a year ago.
“For the last few years, we have seen consumer confidence remain relatively resilient despite several economic challenges, geopolitical uncertainty, and the increased cost of living,” said Céline Fenech, consumer insight lead at Deloitte.
“After recovering from its lowest level on record in the third quarter of 2022, when inflation peaked to a historic high, our consumer confidence index has declined for the first time in almost three years.
“This drop in confidence signals a weakening of consumers’ resilience, as concerns of a slowing labour market have left consumers worried about job security and income growth prospects, while persistent inflation and a high cost of living have negatively impacted sentiment towards personal debt. However, we have seen how the mood of the consumer can change and adapt to new circumstances. If an uptick in both economic growth and business sentiment reduces pressures on the job market and on earnings, a return to positive confidence could still be on the cards.”
Consumer confidence towards the state of the UK economy, not included in the main confidence index, improved by 3.9 percentage points. However, it remains 18.4 percentage points lower than the same period a year ago. This comes as UK finance leaders reported improved business optimism in the second quarter of the year.
Ian Stewart, chief economist at Deloitte, added: “Activity in the UK has slowed in recent months, but an uptick in business confidence seen in the latest Deloitte CFO Survey testifies to continued resilience amid geopolitical uncertainties.
“Higher inflation – which is well above levels in the US and EU – coupled with a weaker jobs market, is weighing on consumer sentiment. The UK is unlikely to see inflation returning to the two per cent rate that prevailed last summer until well into 2026, so the UK consumer will have to navigate several months of uncomfortably high inflation.”
