Scotland Consumer Activity - Consumer Sentiment - Spending and Cost of Living

12th July 2025

The Scottish Consumer Sentiment Indicator rose to ‑5.5 in May, following its sharp drop in April.

Consumer Sentiment
The Scottish Consumer Sentiment Indicator reflects how people feel the economy is performing, how secure they feel about their household finances and how relaxed they feel about spending money.

Consumer sentiment strengthened in May, albeit from relative weakness in April, following a period of declining sentiment since during the second half of 2024. In May, the Scottish Consumer Sentiment Indicator rose by 8.9 points to ‑5.5, its highest net balance since December.

This rise in the indicator was driven by an increase in all five sub-indicators of sentiment covering economic performance, household financial security, and attitudes to spending.

Most notably, the current and expected economic performance indicators increased by 11 points and 9.8 points respectively in May and returned to positive net balances (0.2 and 2.1), while the attitudes to spending indicator increased by 10.2 points but remains the most negative (-17.9).

The net balances indicate that respondents feel the economy is performing broadly in line with a year ago and increasingly expect performance to continue to improve in the coming year.

However, despite recent improvements respondents continue to feel that their household finances are less secure, with expectations that this will continue in the next 12 months.

The improvement in sentiment is in line with consumer sentiment at a UK level, with the GfK indicator rising by 2 points to -18 in June, driven by improving sentiment on economy-related measures. The GfK survey noted, however, that consumer confidence remains fragile against a backdrop of rising inflation, US tariff uncertainty and escalating conflict in the Middle East.

Spending and Cost of Living
At a GB level, retail sales growth slowed over the three months to May, rising by 0.8% in volume terms (0.4% in value terms), with the pace of volume growth slowing from March and April, but remaining stronger than through the turn of the year. Both measures grew by 1.7% on an annual basis.

More stable inflation expectations and reductions in interest rates are improving conditions for consumption, though the full benefits continue to feed through gradually and cost of living challenges and weak sentiment are continuing to weigh on households.

As the gradual loosening of monetary policy feeds through into economic activity, latest Bank of England data for May show that the effective interest rate on the total stock of mortgages (new and existing) has risen marginally, from 3.86% in April to 3.87% in May, with the effective interest rate on new mortgages falling slightly from 4.49% to 4.47%. At the end of June, an average 2-year 75% loan-to-value mortgage offered a rate of 4.32%, up from 4.19% in May. This is the second lowest rate as tracked by the Bank since the end of September 2022, indicating that the pass-through of lower interest rates on the economy is gradually resulting in lower borrowing and mortgage costs for some households.

In May, the average direct debit for mortgages was relatively stable at £989.82, up from £989.58 in April, while the average monthly loan direct debit has fallen from £322.47 to £259.84 over the same period.

Read with graphs HERE