PwC’s latest Consumer Sentiment survey reported a continued decline in consumer confidence for the fifth consecutive quarter. Sentiment has dropped a further 8 points taking the score from -36 to -44.
The index measures consumers’ expectations for their household financial situation and has historically been a good predictor of future consumer spending patterns. The -44 sentiment now sits 2 points below its worst point in the post-recession austerity period in 2012 (-42), but above the record low sentiment at the start of the global financial crisis in 2008 (-51). The research marked a significant drop from the start of the pandemic, when then the score sat at -26 then rose throughout 2021, with confidence being restored through vaccine roll-out and as lockdown restrictions were loosened.
The 55–64 years category has the most negative sentiment of all age groups with a score of -63, a lower score than over 65s at -59 who typically have lower monthly outgoings and more financial protection through savings or pensions. The youthful 18–24 category is now also in negative sentiment for the first time since the start of the pandemic.
Lisa Hooker, consumer markets leader at PwC, said 45–54-year-olds will be more stretched with the financial pressures of having children or teens at home, particularly at the back-to-school time requiring more purchases of things like school uniforms.
“Similarly with the over 55s — perhaps those who took voluntary redundancies or early retirement during the pandemic might be feeling the anxiety of rising mortgages and inflation,” she said.
“For the youngest consumers in the 18–24 category, their sentiment has turned negative for the first time this year marking a change in their confidence. We have young people in a stressful situation that is unfamiliar to them, forging a path for themselves either at university or in the world of work and maybe dealing with bills for the first time.”
Despite the energy help announced, almost half of all consumers (45 per cent) stated they will continue to cut back on their energy usage.
“We are seeing that 46 per cent of consumers are simply buying fewer things and 42 per cent are trading down to cheaper products,” Ms Hooker said.
“For the first time in a number of years, grocery spending intention is in negative territory, despite the double digit price inflation of household essentials, suggesting that shoppers will not only be buying less and trading down, but also switching to cheaper shops. Consumers also tell us that they intend to cut back on going out and fashion — a contrast to the bounceback that these categories saw over the last 12 months as pent-up demand unwound.
“Conversely, whilst consumers are being more conscious of both non-discretionary and out-of-home spending, spending intentions on children, pets, health & wellbeing and personal care have all proven to be more resilient in our surveys. All of these categories trade well for festive gifting so this is better news for retailers in these categories for the Golden Quarter.”
