UK retail sales decline in February, consumer confidence weakens

Investing.com - According to official data released on Friday, UK retail sales in February 2026 fell 0.4% month-on-month, better than the widely expected decline of 0.7%. However, with consumer confidence deteriorating, this data suggests potential weakness in the future.

The decline in February followed a month-on-month increase of 2.0% in January, which was previously reported as a 1.8% increase. The decrease was broad-based, affecting five of the seven retail categories tracked by the UK’s Office for National Statistics.

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Home goods stores recorded the largest decline, falling 2.6% month-on-month, with unusually wet weather partly blamed for the reduced demand. Fuel sales decreased by 0.5% month-on-month in February.

The GfK consumer confidence index dropped from -19 in February to -21 in March, marking an 11-month low and the second consecutive month of decline. This drop reflects households’ concerns about rising inflation and weakening economic activity due to the war in Iran.

With oil prices surging, gasoline and diesel prices rose 15% month-on-month in March, and analysts expect this will further suppress fuel sales in the coming months.

The consumer price inflation rate in February was 3.0%. Capital Economics forecasts that inflation will peak at around 4.7% in November. The research firm anticipates that GfK consumer confidence may fall to around -35 later this year, with the historical low after the energy price shock in 2022 being -49.

Capital Economics expects that consumer spending growth will significantly slow from 1.0% in 2025 to 0.1% in 2026, influenced by factors such as rebounding inflation, slowing wage growth, and rising unemployment.

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