Consumer confidence slipped a little in the last quarter of 2016 as people started to feel the pinch, according to the PwC‘s latest consumer sentiment survey.
While 25 per cent of British consumers expect to be better off in 2017 than they were last year – a marginal improvement on previous surveys in 2016 and 2015, where it was 21 per cent and 22 per cent respectively – 26 per cent of respondents said they expected to be worse off in 12 months‘ time than they are today.
PwC surveyed over 2000 consumers across England, Scotland and Wales and found that issues like falling unemployment and the National Living Wage was driving positive sentiment, while worries over the economy and the progress of Brexit tended to have the opposite effect.
“Our survey results reflect the fact that many consumers‘ personal circumstances have been improving in the past year,” PwC director Kien Tan said.
“For example, when asked why they felt better off, 34 per cent cited pay increases and 30 per cent an improvement in their personal prospects.
“Conversely, of those who thought they would be worse off, the number one reason cited was the economy – by 50 per cent of respondents.”
Tan also highlighted how those in the 45-54 and 55-64 age groups were the most pessimistic, with 31 per cent and 34 per cent expecting to be worse off by next year.
There has also been a “marked deterioration” in sentiment among 35-44 and 45-54 year olds since PwC‘s September survey.
“These ‘pressured families‘ are least likely to have benefited from wage and pension increases, and most likely to have been affected by inflation on fuel and holidays,” Tan said.
PwC partner Lisa Hooker said consumers expected to spend less on almost all areas – from holidays to “big ticket” items and household goods – except for groceries.
“The main reason for this is higher prices, cited by 81 per cent of those expecting to spend more,” she said.
“This will set a challenge for retailers and leisure operators across different categories who will need to adapt their strategies in order to encourage consumers to keep spending with them, even if they plan to buy less overall.”