Britons lose faith in the economy as energy and food costs soar
UK consumers are losing confidence in the British economy, with 62% of people now saying that they feel the economy is worsening.
This is according to the latest Consumer Pulse survey from KPMG, which polled 3,000 UK consumers in March about their financial confidence and spending.
The percentage of people who felt the economy was worsening increased from 58% in the previous quarter to 62%, with only one in ten respondents saying that they felt the economy was improving.
The biggest pain point for UK consumers was grocery costs, with 85% citing food prices as the number one reason they felt the economic situation was worsening.
Rising energy bills are also looming large in the public concern, with the conflict in the Middle East set to lead to higher energy costs in the UK and across the world in the coming months.
The percentage of people concerned with utility costs jumped from 75% to 84% in the last quarter, and the cost of energy and other utilities is cited by 25-54 year-olds as the biggest reason they feel the economy is worsening.
49% of those who said they believe the economy is worsening have reported cutting spending as a consequence, although overall spending remains resilient for now compared to the previous quarter.
However, the percentage of people citing price as the number one purchasing driver for everyday items rose to 71%, the highest level seen in a year.
This signals an increasing concern with affordability and a need to be more price savvy, with more consumers reporting taking advantage of loyalty schemes, buying cheaper brands, and shopping at lower-cost retailers.
“Considering the backdrop of the ongoing conflict in the Middle East, and the actual and potential impact on energy and grocery prices, it is not a surprise that we are seeing heightened consumer concern about the economic health of the UK,” said KPMG UK head of Consumer, Retail, and Leisure Linda Ellet.
“While there are relatively healthy signs of day-to-day spending activity so far this year, a growing number of people say they are deferring larger item spending due to their concern about the economy.”
“The number of people feeling insecure about their financial situation has slightly grown in the last quarter, but the majority of people currently remain secure. That scale of security may be tested in the coming months, depending on how much costs increase by and for how long,” she said.
