Summer ended with a small increase in consumer confidence, with around half of people reporting treating themselves to a meal out or new clothing in the last three months, shows a report published today (Sept 18), also highlighting how cost of groceries remain the top three reasons why people feel that the UK economy is worsening.
The findings come from KPMG UK’s latest Consumer Pulse survey, which in early September asked 3000 people across the UK about their quarterly confidence and spending, with both personal finance and economic scores seeing marginal improvement.
56% of people told KPMG that they feel financially secure, rising one percentage point from the previous quarter. Being able to afford their bills (51%), having savings or investments for unforeseen circumstances (44%), and being able to afford their monthly spend on groceries and other everyday items (38%) are the top three reasons why people feel secure in their personal finances.
While the majority of people (55%) believe that the UK economy is worsening, the measure fell from 60% last quarter and continued the downward trend from 62% when the year began. Meanwhile, those who feel the economy is improving increased by one percentage point to 13%.
The cost of groceries (78%), utilities (73%), and eating and drinking out (51%) remain the top three reasons why people feel that the UK economy is worsening.
Economic pessimism continues to impact spending, but the scale of impact reduced this quarter. Among those feeling that the UK economy is worsening, over half (51%) report reducing everyday spend as a precaution (55% in Q2), 36% saving more (37% in Q2) and 33% deferring big-ticket purchases (38% in Q2).
Despite the ongoing levels of concern regarding the economy, personal financial confidence levels helped to drive summer spending activity, with consumers saying they:
- Ate out in a restaurant: 53% / fast food: 44%.
- Went out for an alcoholic drink: 38% / non-alcohol drink: 28%.
- Ordered takeaway food at home: 40%.
- Bought new clothing: 45% / new footwear: 27%.
- Went to the cinema: 29% / gig, theatre, other ticketed event: 23%.
Spend in relation to a holiday was the most common (30%) big-ticket purchase over the last three months, followed by minor home improvements (14%), and personal technology (12%). But four in ten (39%) consumers say they made no larger price purchases at all.
Commenting on the findings, Linda Ellett, UK Head of Consumer, Retail and Leisure for KPMG UK, said: “Healthy levels of summer spending activity were driven by resilient consumer financial confidence, the warm weather, and coincided with marginal improvement regarding perception of the UK economy.
"The retail sector saw sales growth, particularly in the early part of summer, while over half of consumers report having eaten out and around four in ten going out for a drink.
“The final quarter of the year, including Black Friday promotional month and Christmas, is key for retailers – who will be hoping to improve further upon the early summer months. But macroeconomic challenges, both domestically and globally, remain, as does the impact of an ongoing majority of consumers feeling the UK economy is worsening. Spending, particularly on big ticket items, remains subdued, due to consumer caution.
"October’s Budget presents another opportunity for the government to reassure consumers about the direction of the economy and cost of living pressures heading into the winter and beyond. This could make all the difference for retailers in this crucial period.”
More consumers say they bought in-store (63%) than online (57%) during the summer months - with debit card the most common (52%) way of paying (vs cash 39% and credit card 38%).
Second-hand shopping continued to show popularity, with a fifth (20%) of people reporting buying clothing in the last three months, 9% buying footwear, and 18% selling clothing or footwear. Selling second-hand goods was highest among (24% of) 18- to 24-year-olds.
Q4 forecast:
Looking to the next three months, consumers most commonly (37%) said they were unlikely to spend more than during the previous quarter. But among those predicting they will spend more: 27% say so on dining out, 22% on new clothing, and 19% on fast food.
Spending on a holiday is the most common big-ticket spending plan, for 28% of people. But 42% of people said they had no plans for larger spending at all.