PwC Consumer Sentiment Survey - Summer 2025

Rising sentiment despite continued economic uncertainty for most

Our latest consumer sentiment survey shows net confidence (the difference between those who think they’ll be better off next year and those who think they’ll be worse off) has risen from -12 to -5, the highest level this year. It’s positive but not quite the full picture - this optimism hasn’t increased across all groups. In fact, only 25-34 year olds and the most affluent are now better off than they were 12 months ago, with every other demographic and socioeconomic group feeling worse than last year.

In previous surveys there’s been a steady improvement in household finances since 2022 but this has stalled since the start of 2024. Household finances are now worse than immediately after the general election as well as in the first half of 2024. Again, 25-34 year olds buck this trend with stronger household finances than the UK average. Although encouraging, it’s been at the expense of under 25s and over 45s, who have all seen their finances deteriorate in the last 12 months.

The widening polarisation that we saw in our Spring consumer sentiment survey has clearly continued into this quarter. Even with improving sentiment, the concerns that we saw in the last survey around inflation and job security have deepened across all demographics, particularly in the young and lower socioeconomic groups.

PwC Consumer Sentiment Index, 2008-25

“Thinking about your disposable income in the next 12 months, do you think your household will be...?”

Mixed sentiment across consumer segments

In previous surveys, polarisation between the most optimistic and pessimistic demographic groups had been shrinking. But, last quarter the gap started to widen again - a trend that has continued into the latest survey and may be an indicator of tougher times ahead.

The 25 to 34-year- old group remains optimistic, particularly as they continue to benefit from National Insurance rate cuts, National Living Wage increases and more stable job prospects. Many are increasingly also pre-mortgage and pre-family. This is in contrast with all other demographics who face concerns around inflation, job prospects and worsening household finances. Making things even worse, household finances have stalled since the beginning of 2024. Particularly for older and less affluent consumers, who are feeling the pinch.

PwC Consumer Sentiment Index, 2019-25

Balance of opinion by age group

PwC Consumer Sentiment Index, 2019-25

Balance of opinion by socio-economic group

There is now little difference between 25-34 year olds (41%) and 65+ age group (44%) who say their household finances are healthy. Historically, retirees were in a stronger position but, as 25-34 year olds have benefitted more from their personal circumstances and recent government policies than over 65s, this gap is reducing. Both groups are in a better financial position than the UK average, while other demographics appear to be falling behind.

Economy, inflation and other factors all affecting consumer spending

Concern about personal and national issues

Proportion of adults concerned about these issues over the next 12 months, January-July 2025

Concerns around the economy and global events have remained a consistent theme and a widespread concern affecting future spending intentions. In this survey, we have also seen concerns increase around inflation and job security and prospects.

Job concerns have been particularly felt amongst younger demographics, while consumers across all demographics are concerned about the rising cost of everyday things, reflecting the uptick in inflation in the second quarter of 2025.

Concern about personal and national issues

Proportion of adults concerned about these issues over the next 12 months, January-July 2025

Rising cost of everyday things

Job security or job prospects

Spending cut backs softening as consumers expect to spend more in certain areas

Last quarter, we saw a marked fall in category spending intentions. These have now stabilised with little change in the last three months. Grocery has bucked the trend, with more shoppers expecting to spend more in the next 12 months due to anticipated inflation. Conversely, there has been a slight decline in the proportion of consumers expecting to spend more on big ticket items such as furniture and appliances, and fewer people looking to make large purchases.

Consumer spending intention by category, July 2025

“How do you expect your spending to change on the following categories over the next 12 months?”

Spending intention varies widely between demographic groups, with under 35s being much more willing to increase discretionary spending.

Consumer spending intention by age group, July 2025

Net spending intention over the next 12 months

When it comes to category priorities, it’s no surprise that the non-discretionary categories of grocery, children and pets come first, followed by holidays, health, home and hobbies for the majority of consumers. However, under 35s are notably more willing to spend on fashion, beauty, technology, and, for under 25s, going out, offering consolation for a retail and hospitality sector facing more subdued demand from older demographics.

A tale of two halves for retail operators?

Consumer sentiment is now better than the long-run average and is no longer in decline - encouraging news for retail, consumer and leisure businesses. However, a closer look suggests a mixed picture that varies greatly across different demographic and socioeconomic groups. In reality, only 25-34 year olds and the most affluent are in a better financial position than last year, while other groups feel worse off.

The retail and hospitality sectors have had a relatively strong start to 2025, particularly given wider economic turmoil. Rising consumer sentiment, although concentrated in two demographic groups, may be a positive sign of a shift to come that has not yet trickled down across other groups. This could bring a new level of optimism ahead and boost consumer spending in the coming months, particularly as employment levels remain high and wages continue to rise in real terms. Although this will have to be balanced against the rising cost of living, keenly felt across the whole population. Spending may be tempered by growing concerns around job prospects for younger consumers and signs that inflation is rising again, driving higher levels of savings.

It will be interesting to see how the growing divergence between consumer groups continues in the next quarter. Hopefully, as the wider political landscape settles, consumers will have greater clarity on how and where to spend. At the moment it’s clear that consumers are being more cautious with their spending but if sentiment continues to rise across all demographics, this could be a sign of a more positive outlook ahead for consumers and retailers alike.

This research is based on a nationally representative survey of 2,073 adults conducted between 1-3 July 2025.