Retailers are facing an even more price-driven consumer as confidence in the UK economy weakens and concern over household bills intensifies, new research from KPMG has found.
The consultancy’s latest Consumer Pulse survey shows shoppers are becoming more cautious with their money, leaning harder on loyalty schemes, promotions, own-label products and lower-cost retailers as pressure on household budgets continues to mount.
According to the research, 62 per cent of UK consumers now believe the economy is worsening, up from 58 per cent in the previous quarter, while only 10 per cent think conditions are improving.
For retail, the clearest warning sign is where that anxiety is landing. Grocery costs remain the biggest driver of concern, cited by 85 per cent of those who say the economy is deteriorating, while worries over household utilities surged to 84 per cent, up nine percentage points in a single quarter.
That shift is reinforcing a shopping mindset centred firmly on value. Price was the top purchasing driver for everyday items for 71 per cent of consumers, the highest level recorded in a year.
At the same time, shoppers reported becoming even more tactical in their behaviour. More consumers said they were using loyalty schemes to access lower prices, buying more own-brand and value products, trading into cheaper brands and choosing lower-cost retailers.
The findings point to a retail environment in which consumers are still spending, but doing so more selectively and with far greater scrutiny over where their money goes.
Nearly half, or 49 per cent, of those who think the economy is worsening said they are cutting their spending as a result. Meanwhile, 40 per cent said they were delaying big-ticket purchases, up from 34 per cent in the previous quarter.
That caution is likely to keep pressure on retailers already battling margin strain, input cost inflation and increasingly value-conscious shoppers.
Despite the gloom, there were some signs of resilience in day-to-day spending.
KPMG found consumers had spent more on eating out and takeaway food over the quarter, with 59 per cent saying they had eaten in a restaurant so far in 2026, 47 per cent ordering takeaway and 39 per cent going out for an alcoholic drink.
But that resilience has its limits. Almost half of all consumers, 47 per cent, said they have yet to make a big-ticket purchase this year, underlining the pressure on discretionary retail categories.
Where consumers are willing to spend more heavily, holidays continue to stand out. The most common major purchase in the past three months was a holiday or holiday booking, made by 22 per cent of respondents.
Linda Ellett, head of consumer, retail and leisure at KPMG UK, said retailers were operating in an increasingly difficult landscape as shoppers prioritise essentials and search harder for value.
She said: “Considering the backdrop of the ongoing conflict in the Middle East, and the actual and potential impact on energy and grocery prices, it is not a surprise that we are seeing heightened consumer concern about the economic health of the UK.
“While there are relatively healthy signs of day-to-day spending activity so far this year, a growing number of people say they are deferring larger item spending due to their concern about the economy.”
Ellett added that the “cautious consumer landscape continues”, with rising essential costs and macroeconomic concern driving an increased focus on price and promotions.
The figures suggest retailers may need to work even harder to convince shoppers to part with their cash in the months ahead.
While 54 per cent of consumers still describe themselves as financially secure, that figure has edged down from 56 per cent, while the proportion feeling financially insecure has risen from 22 per cent to 25 per cent.
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