Before the outbreak of war in the Middle East, consumer spending in the UK had cooled down, with retail sales in February declining for the first time in three months.

The latest retail sales data for February released in the UK shows that consumer spending in the country has declined for the first time since November last year, even before the Iran war cast a significant shadow of energy inflation over the UK's economic outlook. According to the latest data released by the UK's National Statistics Office, total online and offline retail sales in February showed a month-on-month decrease of 0.4%, reversing the previous month's increase in consumer spending; previously, retail sales in January surged by 2% after being revised. This is the first decline in retail sales in three months, but better than the economists' consensus expectation of a 0.7% decline. As shown in the above figure, UK consumers reduced their spending in February - the monthly change in retail sales. This data report indicates that the UK retail industry has entered a period of economic turbulence triggered by geopolitical conflicts on a weak foundation since March. Economists have reduced their expectations for UK economic growth due to the Middle East conflict, and the Bank of England expects petrol price shocks to immediately push up UK inflation. With the UK's energy price cap facing a reset in the summer, British people will also face rising electricity and gas prices. Sergey Kondratyuk, a partner at McKinsey & Company, said that potential demand in the UK market "looks relatively fragile." He added that British households are expected to reduce their spending on items such as furniture. The report from the UK's National Statistics Office shows that supermarket sales increased in January 2026 but declined in February. Online retailers recorded a decrease in retail sales in February as well, as consumers may have made more purchases early in the year to take advantage of discounts. The rainy weather in February also led to a significant decline in sales of household goods in the UK. Nicholas Found, head of business content at Retail Economics, said that Valentine's Day on February 14 brought a slight boost to gift sales, as shopping activities were still "highly selective and event-driven." However, energy price shocks driven by geopolitical conflicts in the Middle East have now become the most pressing issue for consumers. Another GfK survey report released on Friday showed that UK households are increasing savings and postponing large purchases to cushion the impact of rising living costs due to energy price shocks. Concerns about soaring inflation have pushed consumer confidence in March to its lowest level since Prime Minister Keir Starmer's Labour government came to power, according to a survey by the British Retail Consortium. Next Plc and Swedish fashion brand Hennes & Mauritz AB warned that if geopolitical conflicts in the Middle East persist for a long time, they may significantly increase manufacturing costs, forcing them to raise clothing prices. The data from the UK's National Statistics Office is consistent with other reports showing weak retail sales in February; the British Retail Consortium recently pointed out that sales of non-food items recorded the deepest decline since May last year. The latest Economic Outlook report published by the Organisation for Economic Co-operation and Development (OECD), covering 38 member countries (including developed and developing countries), shows that the Paris-based research institution and economic organization has significantly raised its inflation forecasts for the major global economies, with the average inflation rate for the Group of 20 expected to rise to 4% this year. The OECD is the first global major international economic research institution to formally update its annual economic forecasts. Other indicators, such as the latest forecasts from numerous business survey research institutions, have begun to show an almost synchronous global impact of the Middle East geopolitical situation: significant weakening of economic activity and a trend towards rising prices. The OECD stated in its forecast, "The breadth and duration of this conflict are highly uncertain, but if high energy prices persist for a prolonged period, they will significantly raise business operating costs in the long term and substantially increase consumer price inflation, resulting in extremely adverse consequences for growth."