Consumer confidence in the economy falls to its lowest level this year

The percentage of people who believe the economy is worsening increased from 51% to 62% in the past three months, KPMG’s Consumer Pulse survey of 3,000 UK consumers revealed.

This is up from 43% at the beginning of 2025. The latest survey showed that while 58% of consumers feel financially secure, many are reducing or deferring spending.

Out of those who said the UK economy is getting worse, 56% are cutting spending on everyday items and 38% are deferring big ticket items. This has risen compared to last year’s figures of 51% and 35% respectively.

The price of groceries is the most common reason people feel the economy is declining at 81%, while 77% believe it is the price of utilities.

Like previous Consumer Pulse surveys, eating out and takeaways are the most common things people report spending less on this quarter compared to last, with 40% and 34% respectively.

The last three months saw 15% of consumers buying an electrical appliance, 14% spending on minor home improvements, and 10% buying furniture.

KPMG UK head of consumer, retail and leisure Linda Ellett said: “Rising food inflation and news of higher energy bills this autumn are two likely factors in the increase in consumer pessimism about the UK economy over the last quarter.  

“Despite the majority of households feeling secure in their current ability to manage their household budget, concern about what a worsening economy will or could mean is leading consumers to say they are cutting, altering or deferring spending.  

“As the Budget approaches, the government need to convince more households that the economy is heading in the right direction.

“Larger purchases are more considered than everyday spend for the majority of people, but there is often money there for the right occasion, product or deal – as demonstrated by holiday spending or household goods buying this summer.  

“Retailers will be focussing on how they entice cautious consumers to spend during the final promotional and festive months of 2025.”