PwC: Consumer Confidence At Highest Level In A Year

• Consumer sentiment in the UK increased from -12 in March to -5 at the beginning of July 

• Improvement in sentiment concentrated in the 25 to 34-year-old and AB socioeconomic groups 

• Concerns about inflation and job security increase across all age groups  

PwC’s latest Consumer Sentiment Survey shows consumers are feeling more confident this summer after dropping three times in the past year. However, this improvement was concentrated in two segments of the population – the 25 to 34-year-olds and those in the highest socio-economic group – reflecting a divergence between other demographic groups. Meanwhile, the findings also show that consumers across the board remain concerned about inflation and their job security. 

Sentiment diverging 

The survey, a key indicator of consumers’ spending intentions in the year ahead, recorded an index score of -5, the highest in a year and better than the long-run average, albeit below last July (-4), directly after the last General Election. While sentiment improved slightly across all demographic groups in the last quarter, 25 to 34-year-olds (+13) and ABs (+10) are the only groups that are more optimistic compared to this time last year. One of the reasons both groups are feeling more buoyant is the findings show they are the only groups that have seen household finances improve in the last 12 months. Elsewhere, all the other groups surveyed are on average worse off compared to a year ago. 

Consumer Concerns 

PwC’s latest survey shows economic concerns remain widespread amongst consumers – with 84% saying that the ‘rising cost of everyday things’ remains a worry, with the other top concern being the UK economy (86%). Job security and job progression was a concern for 39% of respondents, up from 36% at the start of the year. While this is one of the lowest concerns for the population as a whole, this has become a more pressing worry amongst younger people, with 60% of 18 to 24-year-olds and 66% of 25 to 34-year-olds expressing their unease about prospects, up from 49% and 57% respectively at the start of the year.  

Sam Waller, Leader of Industry for Consumer Markets at PwC, said:  

“While sentiment has improved since the spring and stopped declining, the contrast of those feeling the most and least optimistic is split demographically with the majority of the population – while slightly more upbeat that earlier this year – still feeling worse off compared to this time last year. 

“Businesses in the consumer industry will need to be agile and pivot their offerings to target to their more confident customers given the current economic backdrop and how hesitant some consumers are about discretionary spending.” 

Spending plans 
Overall, consumer spending intentions have softened slightly across most categories in the survey since the spring, although across the board, grocery spending remains an exception with 46% saying they intend to spend more on this in the next 12 months (and only 14% saying they will spend less), partly driven by expectations of higher prices. Non-discretionary categories of children and pets remain the next most important priority for consumers, followed by holidays with 21% saying they intend to spend more on trips in the next 12 months. For over 65s, holidays are the highest priority spending category after groceries and pets. By comparison, under 35s prioritise spending on more typically discretionary spending categories such as fashion, health, wellbeing and beauty, with more young people planning to increase spending in these categories than decrease.  

Jacqueline Windsor, Head of Retail at PwC UK, said:  

“The retail and hospitality sectors have had a relatively strong start to 2025 particularly given wider economic uncertainty, with non-food retail sales volumes in particular recovering after a challenging two to three years. It is a relief for consumer-facing businesses that overall consumer sentiment has started to move in a positive direction. 

“However, the extent to which consumers are being cautious in their spending as we go into the critical second half of the year remains a concern, with inflation and job security weighing on purchasing decisions.“ 

Source : PwC

Image : Elena Abrazhevich / Shutterstock / 502432939 

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