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Consumer confidence still strong but new realities dampen the outlook to Christmas


  • Consumer sentiment at +3, falling to pre pandemic levels
  • It’s the lowest it has been in 2021 but is still positive, and higher than the period following the EU referendum 
  • Inflation, energy crisis and HGV driver shortages starting to impact confidence 
  • Signs of consumer caution in their category spending intentions
Consumer confidence has returned to pre-pandemic levels, following record highs earlier in the year, as inflation, concern over supply chains and out-of-stocks cause a slight decline in optimism. Despite this waning of consumer confidence, overall at +3 on the index, sentiment remains positive meaning that more respondents thought they would be better off in the next 12 months than worse off.

Sentiment is now at the same level we saw in December 2019, the last survey before the pandemic. And while it’s at the lowest level we’ve seen in 2021, confidence is still higher than at any point between 2016-19, following the EU referendum.


In June every demographic group and region was net positive for the first time ever. Now, sentiment is in decline in almost every age category, region, and demographic. Many of these are slight declines, but it’s been enough to push several groups into negative territory. The shift suggests that people are beginning to feel uneasy about their financial security. 

Sentiment amongst older age groups has declined most significantly, with all the over 45s in negative numbers, and 55 - 64s now the least optimistic group (-11 net). However, those under 45 remain largely positive, with 25-34 year olds being the only demographic group to have maintained sentiment. This may be a delayed impact of the ‘vaccine effect’, which improved sentiment in older age groups in the spring and now in this demographic who have the opportunity to be fully vaccinated.

Whilst under 25s are still the most optimistic age group, sentiment has fallen fastest among them. As furlough ends and with fewer job opportunities for graduates, sentiment of this age group has been impacted.

Around half of people surveyed have experienced either grocery price inflation or utility/petrol price inflation. A similar number of people expect inflation to continue over the coming months. The survey was conducted before the failure of several large utility companies, and before the current petrol shortages, so the numbers experiencing inflation would likely be even higher if the survey was taken now.

Meanwhile, the majority of respondents have witnessed empty shelves at supermarkets, and for most that meant items they wanted were out of stock. People indicated that they are only expecting out-of-stocks to get worse as we approach Christmas.

While two-thirds of 55-64 year olds say their grocery shop is more expensive than earlier this year, that figure was just 31% for 18-24 year olds. As concerns about inflation weigh on their disposable income expectations, sentiment is falling for older generations.

Category spending intentions are also reverting to a more normal picture, with grocery shopping and home improvement the only categories where a majority of respondents thought they would spend more in the next 12 months than spend less. And given the price inflation it’s not surprising that people expected spending on groceries to increase.  With people continuing to spend time at home, adapting to hybrid working, this may have caused spending on home projects to be prioritised.

However, there has been a drop-off in spending intention on big-ticket items, such as furniture and household appliances, with the number of people expecting to spend less outnumbering those who expect to spend more by 3 to 1. This could be an indicator of future consumer optimism. People are significantly less likely to invest in these items when concerned about income security. 

Lisa Hooker, consumer markets lead at PwC, said;

“It’s little surprise that consumer sentiment has not maintained the record levels we saw earlier in the year. But with confidence stronger than last year - and for most of the post-referendum period - it’s not all bad news. 

“But the general positivity must come with a warning. The inflationary factors that have triggered the decline in sentiment are unlikely to ease in the short term, particularly for grocery, utilities and petrol. Combined with the current problems facing those industries in relation to supply, we’re beginning to see it affecting consumers’ day-to-day lives and, in turn, sentiment and demand.

“For both retail and leisure sectors, the timing couldn’t be worse. After the disappointment of last year, retailers and hospitality operators desperately need a strong run up to Christmas. Even without lockdowns, they will need to convince consumers to part with savings to have any hope of recovering to pre-pandemic levels.

“For many, the coming weeks will be make or break: can the driver shortages be addressed and supply chain pressures eased? When will the crisis at the petrol pumps be resolved? And will higher energy prices cause more widespread inflationary pressures and a reluctance from consumers to spend?”



Notes to editors

About the survey findings

1. PwC’s latest consumer sentiment survey was conducted between 17-20 September 2021 and includes responses from a nationally representative sample of 2,070 adults.

2. PwC has asked the same question every few months since April 2008: “Thinking about your disposable income (money remaining after household bills, credit cards, etc.), in the next 12 months do you expect that your household will be better off or worse off?”. The index is calculated by subtracting the percentage of people who think they will be worse off from those who think they will be better off. Historically this index has provided an insight into the pulse of the nation, and has been a good indicator of future consumer spending patterns.



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