UK Consumer Mood Monitor – November 2023
Consumer confidence in the UK is very low with a majority expecting the economic situation to worsen in the next six months. The cost of living is a key issue driving this pessimism, although the affordability of housing is also a major contributor.
3 in 5 consumers expect the UK and world economies to worsen in the next six months. This reflects people’s fears of a coming recession and the still relatively high inflation level.
The largest drivers behind the negative perception of the economy are the cost of living, the cost of borrowing, and the affordability of housing. All have a majority of consumers expecting them to get worse. While inflation has slowed significantly compared to a year ago, it is still relatively high at 4.3 percent. The larger problem is that wages have simply failed to catch up with the inflation which occurred over the past year.
Consumers clearly expect prices will continue to increase with roughly half of people expecting to more on household energy and fuel and over a third expecting to spend more on groceries over the next six months. Consequently, the majority of consumers are cautious about their expected spending on non-necessities such as holidays and entertainment over the next six months.
There are two significant factors likely to be influencing this. The first is the time of year. Household budgets are always tighter in the winter due to higher energy needs. Household energy bills being the area most likely to increase shows that this is certainly a concern for many consumers.
The second is the fear of continued inflation. The prioritisation of necessities over non-essentials indicates that consumers expect prices to keep rising and are therefore planning to adjust their consumption habits to balance their budgets.
Despite the general pessimism, there is relative positivity around the jobs market, particularly among skilled manual workers. Six out of ten consumers expect the jobs market to get better or stay the same. Nonetheless, it is clear that despite this, consumers do not expect their wages to go as far they previously did. Half of consumers expect their level of disposable income to decrease over the next six months.
