Rising fuel costs and Middle East tension hit UK spending

Recent surveys indicate that surging fuel prices, driven by the ongoing conflict involving Iran, have begun to weigh heavily on households across the United Kingdom. The rise in energy costs, particularly for Brent Crude Oil, has led many consumers to scale back on travel plans and discretionary spending. According to data from BARCLAYS PLC, overall consumer spending grew by 0.9% in annual terms throughout March, a slight deceleration from the 1.0% increase recorded in February. Notably, travel spending experienced a significant downturn, falling by 3.3% year-on-year. This represents the first such decline in the sector since March 2021, a period when the global pandemic severely restricted movement. The Barclays report highlighted that travel agents and airlines were the primary drivers of this decline. Approximately one in seven consumers surveyed indicated they were postponing major purchases due to geopolitical instability in the Middle East, while a similar proportion reported focusing on building financial reserves. > Shoppers delaying major purchases and building up a savings buffer in response to the shock from the Middle East reinforces our view that activity will be muted in the coming months, said Barclays economist Jack Meaning. A separate report from the British Retail Consortium (BRC) showed that total retail sales rose by 3.6% in March, up from 1.1% in February. This growth was largely attributed to the early timing of the Easter holidays, which spurred a sharp increase in food sales. However, the performance of non-food items remained inconsistent. While demand for electronics, toys, and homeware was strong, the clothing and footwear sectors continued to underperform. The BRC also noted that the disruption to international travel negatively impacted the sale of travel-related goods. > The disruption to international travel caused by the Middle East conflict also hit sales of travel-related goods, said BRC chief executive Helen Dickinson.