UK consumer confidence takes a pounding in March - PwC report
Britain’s optimism has taken a severe beating as the reality of rising costs hit home. Consumer confidence in March plummeted almost 30 points to -20 for the quickest rate of decline since the global financial crisis in 2008, according to consultancy PwC.
This is a fall from +8 during the same period last year and is only just ahead of the -26 reading reported at the start of the pandemic.
PwC surveyed just over 2,000 people between March 19 and 21 and said sentiment had declined across all age groups, with people preparing to spend less on buying clothes, eating out, and going on holiday but bracing to spend more on groceries because the price of food was going up.
PwC cited a combination of the tightest cost of living squeeze in a generation, inflation rising to its highest rate in three decades, tax hikes, and sky-high energy bills. And many experts think pessimism will only grow as price rises continue in the coming months, with inflation peaking at around 9% in October when energy price caps are lifted.
At the same time, wage growth continues to weaken with the prospect of households’ real take-home pay dropping at the quickest pace since the mid-1950s, according to the Office for Budget Responsibility.
PwC said that there had been a “complete reversal” in consumer priorities compared with a year ago, when households were preparing to spend once lockdown restrictions were eased.
“The shift in sentiment is both significant and sudden,” said Lisa Hooker, consumer markets leader at PwC.
“Whilst there is still some post-Covid recovery, spending expectations on eating out and going out have plummeted as consumers look to tighten their belt as they face up to cost of living pressures,” she added.
Separate research has warned that discretionary spending will fall by up to £850, or 19.5%, for the least affluent households in 2022 and by an average of £430, or 6.5%. This equates to a £12 billion hit to non-essential spending in 2022, said Retail Economics and HyperJar, the digital wallet and savings app.
Richard Lim, chief executive of Retail Economics, said: “A more cost-conscious consumer will emerge in the coming months, looking to form new relationships with brands that can align to these new priorities.”
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