Household Confidence Hits Three-Month Low as Energy Prices Bite

UK household confidence has dropped to a three-month low in September, according to the S&P Global UK Consumer Sentiment Index. The index fell to 42.7 from 42.9 in August, indicating that any reading below 50 signals a contraction in household confidence.

The survey found that households are facing rising energy market volatility, deepening job insecurity, and worsening expectations for borrowing costs. A majority of respondents (53%) expect the Bank of England to raise its policy rate, while only 12% anticipate a rate reduction. This has resulted in a net balance of households anticipating higher rates at +41%, the highest level since October 2023.

Financial strain is broad-based across income groups and regions, with households in Wales and those on the lowest incomes reporting the sharpest deterioration in their current finances. Job insecurity reached a 43-month high, with retail workers expressing the greatest concern about job security. Public sector workers reported a modest improvement in job security for the first time in nearly a year.

Household spending sentiment weakened to a three-month low as cash availability fell at the fastest rate since May. Households are also drawing down savings and facing difficulty securing finance, with access to credit worsening. Demand for unsecured borrowing increased for a second consecutive month.