Scottish economic bulletin: August 2025

Consumer Activity

The Scottish Consumer Sentiment Indicator fell 1.5 points in June to ‑6.9.

Consumer Sentiment

• The Scottish Consumer Sentiment Indicator (SCSI) reflects how people feel the economy is performing, how secure they feel about their household finances and how relaxed they feel about spending money.
• In June, consumer sentiment weakened over the month and continued its pattern of negative sentiment since the end of 2024. The SCSI fell 1.5 points in June to -6.9, and although is higher than the sharp fall in April (-14.3), remains notably lower than at the same point in 2024 (down 11.3 points).^[17]

• The weakening in sentiment over the month was driven by a fall in three out of the five sub-indicators of sentiment covering current and expected economic performance (down 4 points and 1.3 points respectively) and attitudes to spending (down 4.4 points). The sub-indicators for current and expected security of household finances rose over the month (up 1.6 points and 0.8 points respectively). All the sub indicators have fallen on an annual basis.
• Overall, the net balances of four out of the five sub-indicators are negative, indicating that on balance, consumers continue to feel that economic performance is lower than a year ago, their household finances are less secure and expect them to be in 12-months time, and they are less relaxed about spending money than a year ago. However, respondents on balance, continue to expect economic performance to be better next year, albeit to a lesser degree than in May.

• The weakening in sentiment is in line with consumer sentiment at a UK level. The GfK consumer confidence indicator fell by one point to -19 in July, driven by weakening sentiment on economy-related measures. GfK noted that consumers are anticipating economic conditions to worsen over the next 12 months, with uncertainty in the economic outlook potentially reflected in an increase in the savings index.^[18]

Spending and Cost of Living

• At a GB level, retail sales growth slowed over the three months to June, rising by 0.2% in volume terms, but falling in value terms by -0.1%, with the pace of volume and value growth slowing from April and May. Over the year, GB retail sales in volume terms rose by 1.8%, and in value terms rose by 2.2%.^[19]

• More stable inflation expectations and reductions in interest rates are improving conditions for consumption, however the weakness in consumer sentiment reflects that demand conditions remain challenging.
• Evidence from GfK shows that the UK Savings Index rose in July and is up by 7 points from the same time last year, suggesting that consumers are anxious about the uncertainty in the economic outlook and are potentially choosing to save more rather than spend.
• As the gradual loosening of monetary policy feeds through to economic activity, evidence from the latest data from Bank of England shows that the effectve interest rate on the new mortgages has fallen from 4.47% in May to 4.34% in June, while the effective interest rate on the stock of existing mortgages continued to rise marginally from 3.87%% to 3.88% in June.