The cost of living crisis has knocked UK consumer confidence down to its lowest level since the pandemic, as rising food and energy bills continue to hammer families.
As per a new report from PwC today (4), there has been a “significant and sustained drop-off in consumer sentiment”, leading to the biggest one-year drop in confidence since the global financial crisis.
Its index of UK consumer confidence has dropped to -20 this month, from +10 last summer. That’s barely above the -26 recorded at the start of the pandemic two years ago. The 30-point drop over the last nine months is the biggest sustained decline in PwC’s survey since the 2008 Global Financial Crisis, as households face the biggest squeeze in decades.
Three quarters of people surveyed by PwC last month had seen their grocery shopping become more expensive in the past few months while 78 percent expect prices will rise further in the coming months.
It’s a similar picture with utilities - two-thirds were already spending more, with 77 percent expecting further rises. Just 4 percent of all consumers do not expect to increase spending on either groceries, utilities or petrol in the coming months.
PwC’s consumer confidence report further shows that spending expectations for eating out, going out, holidays and fashion spending have all fallen this year since UK consumers are cutting back on discretionary spending, as rising food bills leave them with less money for others. Grocery is now the only category with a net positive spending intention, states the report.
PwC warns that this dramatic drop shows the impact that the cost of living crisis is having across the UK.
Lisa Hooker, leader of Industry for Consumer Markets, PwC UK, says, “This shift in sentiment is both significant and sudden, with consumer spending expectations moving towards more essential areas at the expense of discretionary items. Businesses that help customers by offering them the options to trade down are more likely to keep their loyalty for when things get better.”
From April 1, energy bills have soared by 54 percent and are set to rise again in October. UK inflation hit a 30-year high of 6.2 percent in February, and is expected to rise over 8 percent this month due to last Friday’s rise in the energy price cap.
