UK Retail Sales Suffer Sharpest Slump in Over 40 Years as Iran War Hits Consumer Confidence

British retailers recorded their steepest year-on-year sales decline in more than four decades in April, as rising inflation fears linked to the Iran war weakened household spending and deepened concerns over the country’s economic outlook.

A monthly survey released by the Confederation of British Industry (CBI) on Monday showed its retail sales volume index plunged to -68 in April from -52 in March  the weakest reading since the survey began in 1983.

The figures indicate that 77 per cent of retail firms reported lower sales compared to the same period last year, while only nine per cent recorded an increase, reflecting a broad collapse in consumer demand across the sector.

The CBI said weak consumer confidence remained a major factor behind the decline, with many households cutting back spending amid concerns over rising living costs and uncertainty triggered by the ongoing Iran conflict.

The economic fallout intensified after military actions involving the United States and Israel against Iran in late February disrupted global energy markets and led to the closure of the Strait of Hormuz, a critical route for oil exports. The development has pushed inflation expectations higher and increased pressure on household finances across Europe.

CBI economist Martin Sartorius said businesses were increasingly worried about the combined effects of higher operating costs and weaker consumer spending.

He urged the government to ease cost-of-living pressures by addressing the rising cost of doing business, warning that new employee rights legislation, higher property taxes and elevated electricity bills could further strain the retail sector.

Expectations for May also worsened sharply, with the outlook index falling to -60 from -49, marking the weakest business sentiment since March 2021 during the peak of the COVID-19 pandemic.

Although a separate CBI measure tracking whether sales were considered good, bad or normal for the season showed a less severe decline  dropping to -32 from -23  it still reflected significant weakness and marked the lowest level since June 2025.

The survey, based on responses from 61 retail chains collected between March 26 and April 14, adds to a growing body of evidence showing economic stress in Britain, following a recent fall in the country’s long-running consumer confidence index and weaker manufacturing optimism.

Analysts say the latest figures raise fresh concerns for policymakers already struggling to balance inflation control with efforts to support economic growth, as prolonged geopolitical instability continues to weigh heavily on household spending and business confidence.