Fears of raised inflation in the coming months due to the ongoing conflict in the Middle East has eroded shopper confidence and the overall economic outlook, the BRC-Opinium’s latest Consumer Sentiment Monitor reveals.

Figures released by the British Retail Consortium (BRC) showed that expectations for the state of the UK economy over the next three months worsened significantly, dropping to -53 in March. This represents the lowest level on record, down -23 index points (from -30) in February.

Consumers’ outlooks for their personal finances didn’t fare much better, falling -11 index points in March to -17, which is also the lowest level recorded by the BRC.

“Consumer confidence collapsed as the Middle East conflict raised the prospect of higher inflation in the months ahead,” Helen Dickinson, Chief Executive of the BRC, commented. “As stock markets tumbled, confidence in both the economy and personal finances dropped to their lowest levels on record.”

Dickinson added that spending expectations had also increased as shoppers expect to see rising energy costs reflected across the economy as a result of the conflict.

This was mirrored in figures released earlier this week by KPMG UK, which shows grocery prices remain shoppers number one concern (85%), followed closely by worries about spiralling utility costs. Fears of utility and energy price spikes jumped +9 percentage points to 84% versus last quarter following the start of the tensions in the Middle East. 

“The current conflict has created a great deal of uncertainty in the economy. Inflation is expected to rise in the coming months. Just as the economy was beginning to turn a corner on inflation, the rise in global energy prices is particularly unwelcome for businesses and families,” Dickinson said.