Consumer confidence has plummeted as shoppers brace themselves for the coming rise in living costs.
PwC’s barometer dropped 12 points to reach –13 in April, from –1 in January, amid growing awareness of the Iran war’s effect on fuel, food and utility costs.
The fall wiped off gains made at the start of the year, marking the the fastest quarterly decline in confidence since June 2022.
Nearly 90% of shoppers surveyed for PwC’s market barometer said they were concerned about the cost of living, particularly those aged 35-54.
Sentiment now sits in line with the long-run average seen since PwC’s tracker began in 2008.
“Rising costs are prompting shoppers to pull back spend across the board, and it’s expected sentiment will get worse before it gets better, as consumers face higher energy and food costs later in the year,” said PwC UK consumer markets lead Sam Waller.
Grocery shopping remained shoppers’ top expected spending priority, driven by inflation. Alongside petfood and petcare, it was the only category where consumers expected to increase their budget.
PwC head of retail Jacqueline Windsor added that the sharp drop in consumer confidence would give retailers pause for thought.
She said that while the first half of the year may tend to be a low season for many retailers, the prospect of a golden quarter with higher inflation will feel like “the eye of the storm”.
“Retailers will need to continue to position on value – ensuring they have a range of products for those who plan to trade down as well as cater for those who are going to protect their spending in areas like fashion, health and beauty.”
Retail footfall hit a five-year low in April, as total visits across the UK sank 10.7%, according to BRC-Sensormatic stats released late last week.
Sensormatic retail consultant Andy Sumpter called the figures a sobering reminder of the fragility of the recovery in in-person shopping.
“With consumer confidence falling, and ongoing cost of living pressures, shoppers are becoming more selective – making fewer trips, but with clearer intent when they do,” he added.
“Those who are out and about are often there to spend, making every shopper more valuable.”
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