Consumer confidence in the UK took a sharp turn in Q2 2025, according to Deloitte’s latest Consumer Tracker, falling by 2.6% to 10.4%, which is the lowest level recorded since early 2024. The drop marks the first significant dip in sentiment since October 2022, when inflation hit a 40-year high. The decline spans all six of Deloitte’s consumer confidence measures, with job security registering the steepest fall, down 4.8%. Sentiment around job opportunities and career progression also slid by 3.9%, reflecting concerns over rising employer costs and a cooling labour market. Céline Fenech, consumer insight lead at Deloitte, said: “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. “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.” In a contradictory twist, while overall confidence declined, consumers were slightly more optimistic about the UK economy itself. Confidence in the state of the economy rose by 3.9% compared to the previous quarter, although this remains 18.4% lower than in Q2 2024. 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.” While essential spending declined by 4.6%, discretionary spending was up by 1.5%, with notable increases in clothing and footwear (up by 6.6%). Oliver Vernon-Harcourt, Partner and Head of Retail at Deloitte, commented: “Overall, consumer spending has been more volatile in recent months, showing both positive and negative trends. Consumers remain cautious, no doubt due to the impact of persistent food inflation and higher energy prices. As demand for bigger ticket items such as appliances, electricals, and furniture remained slow in Q2, consumers also spent less on essentials as they prioritised saving and spending disposable income on holidays and eating out. “Overall, tactical spending has become more embedded in consumers’ behaviours and combined with their concerns about the outlook for jobs and unemployment, could mean consumer demand will remain subdued until confidence in the UK economy further strengthens and stabilises. Looking ahead, more positive data will be required to back up any sustained growth in consumer spending.” For fashion brands, this signals a to offer to provide more value and emotional resonance to win their share of wallets in the months ahead.