- Consumer confidence in personal finances is up, but grocery and utility costs remain key concerns.
- 70 per cent of UK consumers plan to holiday this summer, driving demand for travel and retail.
- 77 per cent expect to buy items like clothing and footwear for their trips.
With the majority of UK households feeling financially secure, the economy is set for a summer boost related to 70 per cent of people heading on holiday.
The findings come from KPMG’s latest quarterly Consumer Pulse survey released on Sunday (July 6), based on survey of 3000 people across the UK, which also shows improvements in the last three months in consumer confidence in both personal financial security and the health of the UK economy.
The number of people feeling financially secure has risen this quarter by three percentage points to 58 per cent, while confidence that the UK economy is improving has risen to 17 per cent from one in ten three months ago.
Half of consumers (50 per cent) also report being able to spend freely. But 14 per cent of those surveyed say they are still having to actively cut their discretionary spend to pay for their essentials, while a further 3 per cent of are incurring debt to do so.
Despite the quarterly improvement in economic confidence, half of people (51 per cent) feel that the economy is still worsening (but fewer than the 58 per cent saying so last quarter). Consumer confidence rises
Most commonly those saying that the economy is getting worse cite the cost of their groceries (79 per cent), utilities (74 per cent), and the general state of public services where they live (42 per cent), as reasons why they feel that way.
Responding to the findings, Linda Ellett, Head of Consumer, Retail and Leisure at KPMG UK, said, “Consumer confidence has rallied over the last quarter and only a fifth of consumers now feel insecure about their financial circumstance.
"Businesses will be hoping that this improvement brings about increased spending confidence during the summer months. But macroeconomic confidence still looms large, with half of consumers still to be convinced that the economy isn’t worsening.”
Despite the mixed opinions on the economy, confidence in personal financial management means that seven in ten people say they will holiday this summer, with 34 per cent holidaying in the UK, 21 per cent holidaying abroad and 15 per cent holidaying in both UK and abroad.
In addition to direct travel related spend and the knock-on benefit of people holidaying in the UK, the demand for travel this summer could also bring a boost to the retail sector, with 77 per cent of people expecting to buy items for their holiday, including 41 per cent of those taking a holiday saying they plan to buy new clothing and 25 per cent new footwear.
Reacting to the findings, Linda Ellett, Head of Consumer, Retail and Leisure at KPMG UK, said, “Summer holiday demand looks very healthy, bringing direct and indirect benefit to the UK retail and leisure sectors.
"Many households have prioritised discretionary spend for their holiday but, considering both household essential costs and the price of travel have increased, it is little surprise to see three quarters of holidaymakers are still taking a variety of steps to get the cost of their break down where they can.”
Reflecting on their spending during the last three months compared to the previous quarter, consumers most commonly said they had spent less on eating out.
Around a quarter of consumers (23 per cent) said they had bought more promotional or discounted items when shopping, while just over a fifth (22 per cent) say they used their loyalty cards more.