Consumers feeling positive ahead of Christmas following Brexit blip

Published at 00:01 AM on 21 October 2016

A survey recently conducted by PwC shows that consumers are feeling confident over their disposable income over the next 12 months following the aftershock of the EU referendum. The results of the survey show that following a slight dip in consumer confidence in the month following the EU referendum vote, the majority of consumers now expect to be better off in 12 months’ time. Across Britain, 19% of survey respondents said they expect to be somewhat better off than last year compared to 15% in July. While 6% expect to be much better off than last year compared to 5% in July.

Consumer survey 1

Commenting on the survey results, Kien Tan, director at PwC said:

“Following a slight decline in July following the EU referendum vote, we have seen a recovery in consumer confidence to the same levels we saw earlier in 2016. More consumers expect to be better off next year rather than worse off, and this pattern is repeated throughout the country, with Londoners feeling the most confident (40% expecting to be better off).

“Sentiment amongst young people is particularly buoyant, with 51% of those aged 18-24 expecting to be better off over the next 12 months compared to 20% of those aged over 65.

“Our consumer confidence findings reflect the fact that employment remains high, many have benefitted from the introduction of National Living Wage, and cost inflation (for example due to exchange rate fluctuations) has yet to be reflected in shop prices.

“What is also interesting to see from the results is what people are considering to be their spending priorities; with 45% saying that groceries will remain a top priority over the next 12 months followed closely by 35% of those who said a main holiday remains high up on the list.

“In fact, more consumers are expecting to spend more on groceries and holidays rather than less, as they expect prices to rise following the EU referendum.”

The survey also questioned consumers on their spending habits ahead of the festive season, with fewer people expecting to buy presents on Black Friday this year (13%) compared to last year (17%).

Consumer survey 2

Commenting on the Christmas trading predictions, Lisa Hooker, partner at PwC said:

“This year sees consumers across all age groups and regions saying that they will spend the same amount or less than last year on Christmas. However, this contrasts with our finding that consumers expect to be better off, so we do not expect this sentiment necessarily to reflect in worse retail sales over the critical festive trading period.

“With Christmas falling on a Sunday, and many people travelling home and stores closing early on Christmas Eve, many observers have highlighted Friday 23rd December as the biggest shopping day of the festive season, even though 27% of consumers told us they planned to shop earlier for Christmas presents this year. Black Friday and Cyber Monday do look to be waning in importance though, for consumers as well as retailers.

“Overall, we are positive for the outlook for this Christmas. In particular, October, November and December have been warmer than average for the last three years in a row.  If 2016 reverts to the long term average, a chillier than recent run up to Christmas could be good news for many retailers, such as clothing and outdoor goods retailers, as well as destination shopping centres and department stores where consumers can do all their shopping under one roof.

“Even if consumers do plan to tighten their belts, food and drink are the last place they expect to cut back, with only 13% saying they will spend less on their Christmas dinner”

PwC’s Consumer Sentiment report is released the same week as the latest UK Inflation figures were released.

Commenting on the latest inflation figures, Andrew Sentance, senior economic adviser at PwC, said:

“Inflation has risen to 1.0 percent this month, as expected. Higher import prices are feeding through to consumers because of the fall in sterling since the EU referendum vote. This latest rise, however, is just the tip of the inflationary iceberg which is coming our way. Since the beginning of September, sterling has fallen a further 8 percent or so against the euro and the dollar. This will continue to push up inflation in the months ahead. A stronger oil price will add further to price rises for energy and transport.

“Over the course of next year, we should expect inflation to rise above the Bank of England's 2 percent target. This will squeeze household spending power and add to the slowdown in the economy in 2017. PwC is forecasting a slowdown in growth to around 1% next year, with investment cutbacks reinforcing the slowdown in consumer spending.”

Ends

Notes for Editors:

The latest UK inflation figures came on the same day that PwC’s latest Global Economy Watch confirmed UK households aren’t feeling the effects of the recovery.

The PwC report said that, while UK GDP in Q2 2016 was up by 7.6% since Q1 2008, real household spending per person declined by 0.9% over the same period.

About the Survey:

  • PwC undertook its regular survey of consumer sentiment in September 2016
  • We asked questions to a nationally representative sample of 2,050 consumers across England, Wales and Scotland.
  • We have been measuring consumer sentiment every 3-4 months since 2008, using the question: “Thinking about your disposable income (after household bills, credit cards, etc.), in the next 12 months do you expect your household to be better off or worse off?”At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com©2016 PricewaterhouseCoopers. All rights reserved.

For more information please contact Stephen Young, PwC Media Relations: stephen.m.young@uk.pwc.com / 07789808745


Twitter
LinkedIn
Facebook
Google+

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. © 2016 PwC. All rights reserved

« Retail sales data, October 2016 - PwC comments | Homepage | Public borrowing figures - PwC comments »

  • Contact us
  • +44 (0) 20 7213 1768

Specific and out of hours contacts