UK Consumer Sentiment Hits Five-Year High Amid Cost-of-Living Worries

UK consumer sentiment has reached a five-year high, according to PwC research. The survey recorded an index score of +1 in August, up from -13 in April as fears over the cost-of-living gripped consumers. Despite this improvement, concerns about the cost of living remain high, with 85% of consumers citing it as one of their top worries alongside the UK economy.

The survey found that improving household finances and lower inflation expectations have contributed to the increase in consumer confidence. Perceived household finances are at their strongest level in four years, with 39% of those surveyed describing their financial situation as 'healthy', meaning they have money left over for luxuries or savings.

However, experts warn that the growth in confidence is tempered by worries about the cost of living and potential macroeconomic headwinds. As energy and food prices are set to rise, PwC's Sam Waller advises businesses to incentivize customers to start Christmas shopping early and prepare for a slowdown in consumer demand.

A total of 14% of consumers polled said they had already started their Christmas shopping, while 16% planned to do most of their festive purchases earlier than usual. For the first time since the end of the pandemic, more consumers expect to spend more on Christmas shopping and celebrations rather than less.