Food Inflation Fuels Sharp Drop In Consumer Confidence As Spending Cuts Deepen

Consumer confidence in the UK economy has fallen to its lowest point this year, according to KPMG’s latest Consumer Pulse survey.

The quarterly poll of 3,000 UK consumers found that the proportion of people who believe the economy is worsening has risen sharply—from 51% to 62% in the last three months, and up from 43% since the start of 2025.

Financial security remains steady – but spending slows

Despite mounting concern about the broader economic outlook, 58% of respondents said they still feel financially secure, a figure unchanged since the previous quarter. However, perceptions of a weakening economy are prompting many households to tighten their belts.

Of those who feel the economy is worsening:

• 56% said they are cutting spending on everyday items (up from 51% last quarter)

• 38% are delaying large purchases (up from 35%)

• 38% are saving more as a precaution (up from 36%)

The rising cost of groceries remains the most common reason cited for economic pessimism, now mentioned by 81% of respondents (up from 79%), followed by utility costs at 77% (up from 74%).

Interestingly, almost four in ten consumers (39%) said their outlook was shaped by media or social media coverage, while 21% were influenced by family or friends.

KPMG: “Consumers are cautious but not collapsing”

Commenting on the findings, Linda Ellett, Head of Consumer, Retail and Leisure for KPMG UK, said: “Rising food inflation and news of higher energy bills this autumn are two likely factors in the increase in consumer pessimism about the UK economy over the last quarter.

"Despite the majority of households feeling secure in their current ability to manage their household budget, concern about what a worsening economy will or could mean is leading consumers to say they are cutting, altering or deferring spending. As the Budget approaches, the government need to convince more households that the economy is heading in the right direction.”

Ellett noted that while shoppers are cautious, they are still willing to spend on the right occasions, adding: “As food inflation, higher employment costs, and other supply challenges filter their way through to costs of food and drink — in both groceries and eating out — consumers tell us that they are adapting their behaviour to manage these higher costs. Groups of consumers are cutting back on the frequency or total spend of eating out, making product switches when grocery shopping, or maximising loyalty card prices. Cost continues to influence buying behaviour.”

With consumer caution expected to persist into the winter, the survey suggests that the next few months will be crucial for retailers seeking to capture spending amid a climate of growing economic unease.