As the holiday season nears, concerns over the economy are impacting retail habits.
- A recent report indicates mixed feelings about personal finance and the general economy.
- There’s a modest rise in personal spending despite economic worries, driven by festive preparations.
- Personal financial outlook has slightly improved, yet broader economic expectations have dipped.
- Retailers are under pressure due to expected cost increases impacting prices and investments.
A recent survey by the British Retail Consortium (BRC) reveals a complex picture of consumer sentiment as the festive period approaches. While there was a slight improvement in expectations regarding personal finances, broader economic outlooks have declined. The survey, which included 2,000 UK adults, shows personal financial expectations improved marginally from -4 in October to -3 in November. Meanwhile, the economic outlook score worsened from -17 to -19 in the same period.
Despite economic concerns, there has been a slight uptick in retail spending, with personal spending rising from +2 in October to +3 in November. Overall spending remains stable at +17, consistent with the previous month’s figures. This increase in spending, largely attributed to holiday preparations, whilst non-food spending remains tepid, there is an increase in anticipated spending on dining out, as people plan festive gatherings.
Helen Dickinson, CEO of the BRC, remarked on the minimal shift in consumer confidence post-Chancellor’s Budget, noting that while personal finance expectations showed slight improvement, they were counterbalanced by declining economic expectations. Retailers face the daunting challenge of adapting to additional costs projected for 2025, likely leading to increased prices or reduced investments in jobs and infrastructure. Dickinson highlights the need for the government to address business rate reforms anticipated in 2026 to alleviate financial burdens on retailers.
A warning has been issued by the BRC about potential rises in food inflation, linked to escalating costs. A coalition of over 70 retailers, including major players like Tesco and Amazon, have cautioned that absorbing such significant cost increases is not feasible, potentially fuelling inflationary pressures.
Consumer confidence remains a concern as the festive season approaches, with mixed expectations indicating an uncertain economic landscape.
