Nearly three quarters of Brits plan to cut spending for the rest of 2025 as consumers continue to prioritise saving over splashing out.
While consumer sentiment has remained flat at -5 over summer, inflation worries have been rising and nearly nine in ten Brits now report concerns, according to the latest Consumer Sentiment Survey from PwC.
Over four fifths of respondents said the rising cost of everyday things is a concern, up slightly from the summer and higher across every demographic group since the start of the year.
This is despite a five per cent rise in real earnings since the beginning of 2020.
“Concerns around inflation and household finances are still shaping behaviour, even as earnings improve,” Sam Waller, leader of industry for consumer markets at PwC UK, said.
“Consumer sentiment may have stabilised, but the underlying caution remains,” he added.
As of 2024, the UK savings ratio – a measure of disposable income not spent on final consumption – has doubled to 5.1 percentage points above its 2017/19 average – the largest increase among its G7 peers.
Nearly three quarters plan to cut spending over the next three months, with an even higher percentage of younger and lower income groups planning to hold back.
This is partly due to the rising cost of food. Grocery inflation has been persistently over five per cent for months, with hundreds of pounds set to be added to the average yearly food bill by the end of the year.
‘Businesses must watch their back’
Consumers’ choice to cut back their spending on retail ahead of the crucial festive period poses a serious problem for high street businesses, with many heavily reliant on the Golden Quarter for an end-of-year amid a turbulent time for the sector.
The number of full-time jobs has fallen by around ten per cent in the last decade, and another ten per cent are expected to disappear by 2028.
“As we enter the Golden Quarter, retailers face a delicate balancing act,” Jacqueline Windsor, head of retail at PwC UK, said.
“With consumer sentiment holding steady but caution persisting, businesses must watch their back – particularly as inflation and job security continue to weigh on purchasing decisions.
“Defending market share will reflect how well retailers adapt to shifting behaviours, especially among younger and lower-income groups.”