Consumer confidence in the UK economy fell during the last quarter, reaching the lowest point so far this year, according to KPMG’s latest Consumer Pulse survey.
KPMG’s poll of 3,000 UK consumers found that the number of people feeling that the economy is worsening increased from 51% to 62% in the last three months, and up from 43% since the beginning of 2025.
As has been the case throughout 2025, the majority (58%) of consumers continue to feel financially secure, with no change since the last quarter. However, due to a perception that the UK economy is deteriorating, consumers report that they are reducing or deferring their spending. Of those who agreed that the UK economy is worsening, 56% say they are cutting spending on everyday items (up from 51% last quarter) and 38% are deferring big-ticket purchases (up from 35% last quarter). Meanwhile, 38% are saving more as a contingency (up from 36% last quarter).
The cost of groceries is the most common reason (81%, up from 79% last quarter) to feel that the economy is worsening, followed by utility costs (77%, up from 74% last quarter).
Four in ten (39%) of those saying the economy is worsening say so on the basis of media or social media content that they consume, while a fifth (21%) are influenced by what family and friends tell them.
Linda Ellett, Head of Consumer, Retail and Leisure for KPMG UK, commented: “Rising food inflation and news of higher energy bills this autumn are two likely factors in the increase in consumer pessimism about the UK economy over the last quarter. Despite the majority of households feeling secure in their current ability to manage their household budget, concern about what a worsening economy will or could mean is leading consumers to say they are cutting, altering or deferring spending. As the Budget approaches, the government need to convince more households that the economy is heading in the right direction.
“Larger purchases are more considered than everyday spending for the majority of people, but there is often money there for the right occasion, product or deal – as demonstrated by holiday spending or household goods buying this summer. Retailers will be focusing on how they entice cautious consumers to spend during the final promotional and festive months of 2025.”
Evidence of targeted big-ticket spending over the last three months is highlighted in the survey, with one-third (29%) of respondents saying they spent on a holiday during the period.
Sales of home goods have been experiencing steady monthly increases since the surge in property transactions preceding the Stamp Duty changes in April, with the last three months seeing 15% of consumers purchasing a home electrical appliance, 14% spending on minor home improvements, and one in ten buying furniture.
As has been the case in previous Consumer Pulse surveys this year, eating out (40%) and takeaway (34%) are the most common things people report spending less on this quarter compared to last.
Consumer focus on price was again evident during the last quarter, with price being the number one buying driver for 68% of consumers. A quarter of respondents reported using loyalty cards more, and a quarter also reported buying more promotional or discounted goods.
Ellett concluded: “As food inflation, higher employment costs, and other supply challenges filter their way through to costs of food and drink, in both groceries and eating out, consumers tell us that they are adapting their behaviour to manage these higher costs. Groups of consumers are cutting back on the frequency or total spend of eating out, making product switches when grocery shopping, or maximising loyalty card prices. Cost continues to influence buying behaviour and price is the main purchasing driver for 68% of people when buying everyday items.”
NAM Implications:
- The stats themselves explain some of the hurt for consumers.
- But consumer perception bites deeper (and for longer, see Tesco article today).
- Householders may feel secure in managing their budgets…
- …but only after a couple of years of significant changes in their buying behaviour…
- Watch this space…
