Brits are holding onto their money as busy Christmas period approaches
PwC’s latest Consumer Sentiment Survey shows consumers remain cautious about spending, with confidence remaining at the same level as the last pulse check in the summer.
As the Golden Quarter for retail approaches, the findings show concerns about inflation remain high, while sentiment among 25 to 34-year-olds has fallen over the last quarter.
The survey, a barometer of consumers’ spending intentions, recorded an index score of –5, the same score as the previous quarter. While the score is better than the long-run average (-15), it remains below the highs seen in early 2024 and directly following the summer 2024 UK General Election.
A stable index score suggests stability; however, the findings show some shifts across different demographics with sentiment improving slightly for most age groups and socioeconomic groups but falling for 25 to 34-year-olds (-17 points) and the most affluent AB segment (-19 points).
While the sentiment index score stayed level, anxiety about household finances is rising, with 85% saying the rising cost of everyday things is a concern, up slightly from the summer and higher across every demographic group since the start of the year.
Cautious shoppers
The squeeze on living costs is causing consumers to rethink their spending habits despite real earnings being 5% higher than at the beginning of 2020.
According to PwC’s latest Economic update, UK households have been slower than their G7 peers in unwinding the savings accumulated during the pandemic.
While most advanced economies have seen household savings ratios fall back to, or even below, pre-pandemic levels, the UK stands out as an exception. As of 2024, the UK savings ratio – a measure of disposable income not spent on final consumption – has doubled to 5.1 percentage points above its 2017/19 average – the largest increase among its G7 peers.
This cautious approach is further evidenced by the number of consumers who say they are planning to cut back spending over the next three months rising slightly to almost three quarters (73% of all adults from 71% in the summer), with this intention being more prevalent amongst younger and lower income groups.
Of those planning to cutback, almost two-fifths (39%) said they would be making fewer purchases, more than a third said they would be trading down or buying cheaper items in the same store, and more than a quarter (26%) said they will do so by visiting a cheaper store for some or all of their grocery shopping.
