Shoppers’ optimism has rebounded to hit a five-year high, according to PwC’s quarterly barometer.
Consumer confidence over spending rose across all age groups in the UK, as household finances were perceived to be at their strongest in four years thanks to higher wages and lower inflation.
Headline inflation slowed to just 2.9% in July 2026, with food inflation even lower at 1.3%.
Now, after the hottest UK summer on record, shopper sentiment hit a positive score of +1 on PwC’s survey, after a sharp fall in April to –13 that followed the start of the Middle East conflict.
The jump in sentiment was particularly strong among 35 to 44-year-olds, who gave their highest score ever recorded for the survey at +21.
Yet optimism continued to be tempered by worries over the cost of living, which 85% consumers identified as one of their top concerns. A similar proportion (86%) said the UK economy was a major worry. While both figures were down from April, they were at roughly the same level as they were at the start of 2026.
And younger people (aged 18 to 24) have grown increasingly worried about their job prospects or security, with 61% calling it a key concern, compared with 54% in January.
“The World Cup and the heatwave have helped spur a welcome uplift in consumer sentiment,” said PwC consumer markets lead Sam Waller. “But our survey shows consumer caution hasn’t gone away. Cost of living pressures remain – and for some are an increasing concern.”
He said pressure would mount on consumers as inflation begins to creep up in the autumn of 2026.
The FDF last week forecast that food inflation would rise again to just below 4% by Christmas, before plateauing above 5% through 2027.
“This will impact consumer-facing businesses – along with wider macroeconomic headwinds that could spell higher interest rates and possible tax rises. Businesses should incentivise customers to start Christmas shopping now, and at the same, they must prepare themselves for a slowdown in consumer demand, look for ways to optimise operating costs, and to get their back-of-house in order.”
A seventh (14%) of consumers have already started their Christmas shopping, according to the survey. But in a good sign for festive shopping, the number of shoppers who expected to spend more at Christmas increased for the first time since the end of the pandemic. Some 25% planned to spend more for the holiday, compared with 22% a year ago.
“For retailers, Christmas needs to come early,” said PwC head of retail Jacqueline Windsor.
“Consumer sentiment has hit positive territory for the first time since the pandemic, and some people have already started festive shopping. It’s a golden period of consumer confidence that may have come too early for the golden quarter.
“We expect food and fuel inflation to bite in the autumn, and added uncertainty as the new Chancellor assesses if any tax changes may be needed in the upcoming budget. Retailers would do well to strike early with Christmas before purse-strings tighten.”
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