Consumer confidence in the UK fell to its lowest level on record in March, as concerns over inflation and global instability weighed heavily on households, according to data from the British Retail Consortium and Opinium.

Expectations for the state of the economy over the next three months dropped sharply to -53, down from -30 in February. Confidence in personal finances also deteriorated, falling to -17 from -6, marking another record low.

Despite the worsening outlook, consumers indicated they expected to spend more. Anticipated retail spending edged up to +2 from 0, while overall spending expectations rose to +13 from +6. At the same time, expectations for saving declined to -8, suggesting households may dip into reserves to manage rising costs.

Helen Dickinson, chief executive of the British Retail Consortium, said the sharp fall in confidence reflected growing uncertainty linked to geopolitical tensions. “Consumer confidence collapsed as the Middle East conflict raised the prospect of higher inflation in the months ahead,” she said.

She noted that the decline was particularly pronounced among older consumers, who are more exposed to movements in investment and pension markets. Falling stock markets and rising energy prices have contributed to a more pessimistic outlook, even as spending expectations increase.

“The current conflict has created significant uncertainty,” Dickinson said. “Inflation is expected to rise, and higher global energy prices are unwelcome for both businesses and households.”

The divergence between falling confidence and rising spending expectations points to mounting pressure on household finances. Consumers appear to be bracing for higher costs, particularly in energy and everyday goods, while continuing to spend in the near term.

Dickinson urged policymakers to avoid adding further strain. “It is vital that government policy does not exacerbate the situation,” she said, highlighting the potential impact of new employment regulations and higher packaging taxes on retailers.

She added that limiting additional cost burdens on businesses would be key to protecting consumers from further increases in the cost of living.