UK Retail Sales Decline in February
British retail sales volumes fell by 0.4% in February on a monthly basis, according to official data released by the Office for National Statistics. The decline comes ahead of a potentially stronger economic impact in March, as rising oil prices linked to the Iran conflict begin to pressure household budgets.
Forecast vs. Actual Data
Economists surveyed by Reuters had expected a sharper drop of 0.7% in retail sales. However, the smaller-than-expected decline suggests some short-term resilience in consumer spending despite growing economic concerns.
Rising Oil Prices Weigh on Consumer Confidence
Consumer sentiment in the UK has weakened since the start of the U.S.-Israeli strikes on Iran, which have driven oil prices up by approximately 50%. The extent of the decline in confidence varies across different surveys, reflecting uncertainty among households.
Data from GfK, which conducts the UK’s longest-running consumer confidence survey, shows that sentiment has dropped to its lowest level since April 2025. That period previously saw households under pressure from rising utility bills.
Retailers Remain Cautious
Major UK retailers have taken a cautious stance regarding the outlook for sales. Companies such as John Lewis, Kingfisher (owner of B&Q), and Next reported that they have not yet observed a direct impact from the Iran conflict on sales performance.
Potential Price Increases Ahead
Despite the current stability, Next warned that if the disruption caused by the conflict continues for more than three months, it may need to raise prices to offset increasing operating costs.
This signals that while the immediate effects on retail activity remain limited, prolonged geopolitical tensions could lead to higher prices and reduced consumer purchasing power in the months ahead.
