Scottish economic bulletin: October 2025

Consumer Activity

The Scottish Consumer Sentiment Indicator rose 0.7 points in August to -8.1, however the net balance remains negative.

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 August, consumer sentiment was at -8.1, up by 0.7 points from July however remained notably lower (down 9 points) than at the same point in 2024.^[17]

• The moderate strengthening in sentiment over the month was driven by a rise in three out of the five sub-indicators of sentiment covering current and expected economic performance (up 2.1 and 5.6 points respectively) and expected security of household finances (up 2.7 points). These increases were partly offset by weakening sentiment in current security of household finances and attitude to spending (down by 2.0 and 5.0 points respectively).
• However, all the sub-indicators have fallen on an annual basis, particularly relating to current and expected economic performance. Furthermore, all sub-indicators are in negative territory, with current household finances and attitude to spending most negative, reflecting the ongoing challenges facing household budgets.

• At a UK level, the GfK Consumer Confidence Index fell by two points to -19 in September, driven by weakening sentiment on all sub measures, particularly in the current personal financial and current economic situation measures. GfK noted that consumers continue to anticipate economic conditions to worsen over the next 12 months, with the potential for sentiment to be impacted by announcements in the Autumn Budget in November.^[18]

Spending and Cost of Living

• At a GB level, retail sales contracted over the three months to August, falling by -0.1% in volume terms, though have risen by 0.8% over the past year. In value terms retail sales rose by 0.3% over the 3-months to August and 1.7% over the past year.^[19]

• More stable inflation expectations, relative to recent years, and reductions in interest rates have supported improved conditions for consumption over the past year. However the weakness in consumer sentiment reflects that demand conditions remain challenging.
• 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 marginally fallen from 4.28% in July to 4.26% in August, while the effective interest rate on the stock of existing mortgages continued to rise marginally from 3.88% in July to 3.89% in August.^[20]