Inflation brings consumer confidence to lowest level since 2008

PwC cited soaring inflation as driving a growing disparity between demographic groups, and the cost-of-living crisis taking a toll on disposable incomes.

The survey consulted 2,007 adults between 18 and 21 March.

The findings mark a sharp contrast from PwC’s March 2021 Spring Consumer Sentiment, which showed the highest levels of consumer confidence since the survey began in 2008.

PwC’s consumer sentiment index declined to -20 after peaking at +10 in June last year.

The 30-point drop in nine months marks the biggest sustained fall since the financial crisis, although the index remains higher than it was at the start of the pandemic, when it stood at -26.

Spending expectations on going out and eating out are now the lowest categories, and holidays and fashion spending have also dropped substantially.

The survey also found that sentiment has fallen in almost every age group, but the gap between the most and least optimistic is wider than ever.

The only category where people expect to spend more was on grocery shopping. But this is likely to be driven by inflation, rather than increased consumer demand.

Lisa Hooker, consumer markets Leader at PwC, said: "It’s clear that consumers are having to deal with a significant change in their spending priorities compared to even a year ago.

“With the latest research, we see consumer spending expectations move almost exclusively toward more vital and essential areas such as grocery shopping, children and babies.

“Whilst there is still some post-Covid recovery, spending expectations on eating out and going out have plummeted as consumers look to tighten their belt as they face up to cost-of-living pressures”.