Data: Consumers plan spending cuts on almost all categories bar grocery

The latest PwC Consumer Sentiment Index shows that sentiment has dropped to -8, its lowest level since autumn 2023. Seven out of 10 consumers also say they are planning to reduce their spending over the next 12 months.

Grocery is the only category to have seen a sizeable increase in net spending intention since the previous release in January.

More than four in 10 consumers expect to spend more on food for the home over the next year, while a similar proportion say they are expecting to spend less on eating out.

“Businesses should focus on strengthening customer relationships by offering personalised rewards, incentives and exclusive offers to encourage continued engagement and spending, even amid challenging economic conditions,” said Sam Waller, leader of industry for consumer markets at PwC UK.

Young adults tend to be a bit more positive, with net spending intention positive on all categories except big-ticket items, going out and eating out. Health and wellbeing as well as fashion are among the spending priorities that over-index for this age group.

What makes the results even more worrying for retailers is that the survey was carried out in March, so the figures predate the announcement of 10% tariffs on UK goods by Donald Trump and the associated economic gloom that came with it. Separate consumer confidence figures from GfK showed a slide between March and April, but there are plenty of other factors besides the US president causing consumers’ angst. 

April saw notable increases in bills including council tax, energy and water. It also marked the start of the new financial year and the coming into force of increases in the national living wage and national insurance. These have led to widely reported complaints from business leaders, including the retail and hospitality sector.

Nearly nine out of 10 (87%) of survey respondents expressed concerns about the UK economy. Younger people are the most concerned about job security, with 56% of under 25s and 62% of 25- to 34-year-olds expressing concerns about job safety or prospects.

“The vacancy rate in the UK is falling, suggesting a softer labour market, partly driven by the economic headwinds but also by organisations considering alternatives to hiring as the national insurance changes take hold,” said Alastair Woods, workforce transformation partner at PwC UK. “Many organisations are turning to technology to increase employee capacity, a shift that employees are noticing.”