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Consumer sentiment has fallen to its lowest level since September 2023, marking the sharpest quarterly decline since the start of the Ukraine war, according to the latest PwX Consumer confidence Survey.
A survey of more than 2,000 adults found the index dropped from –1 to –13 following the Easter bank holiday.
The decline reverses gradual improvements recorded over the past year. Analysts found that while older and less affluent groups were partially insulated by benefit and pension increases in April, sentiment fell across every age demographic.
Current data shows nine out of 10 consumers cite the cost of living as their primary concern. Approximately 80% of respondents intend to reduce their spending over the next three months, up from 70% in the previous quarter.
Job security is a growing worry for 60% of people under 45. In the 25 to 44 age bracket, two-thirds of respondents expressed concern regarding mortgage repayments or rent increases.
Younger consumers recorded the most significant deterioration in their financial outlook. The number of people aged 25 to 34 who consider their finances healthy has halved, with an 8% increase in those described as struggling.
Retailers and leisure operators are preparing for further pressure as energy price caps are expected to rise in July. Businesses are being advised to focus on value ranges and loyalty schemes to retain customers who are trading down.
UK head of retail at PwC Jacqueline Windsor said: “The fall in consumer sentiment gives retailers pause for thought. While the first quarter and first half of the year tend to be the low season for many, the prospect of a Golden Quarter with higher inflation will feel like the eye of the storm.
“Retailers will need to continue to position on value – ensuring they have a range of products for those who plan to trade down, as well as catering for those who are going to protect their spending in areas like fashion, health, and beauty.”
Hospitality and leisure sector lead Rick Jones added: “This change in sentiment clearly suggests discretionary spending is set to be reined in by consumers in the short-term. While most of the downward swing in spending intentions is directed at retail moments, eating out and travel, hospitality and leisure companies also need to act now.
“For high street hospitality operators, this will mean continuing to focus on providing great experiences and communicating value for money offerings to drive footfall. Also, pubs, bars and other leisure and hospitality businesses will be hoping the World Cup this summer can provide a timely boost to trade.”
