Consumer Sentiment remains decidedly downbeat

While we have seen a very modest improvement in those who believe the economy will fare better or the same in the coming six months, the vast majority still expect it to deteriorate further in 2023 with sentiment still firmly in negative territory.

This is driven by a range of factors with most consumers expecting the cost of living, the cost of borrowing, and the affordability of housing to worsen further.

The majority still expect their level of disposable income to worsen further in the coming six months. And there are notably more that believe that the jobs market will contract in the next six months versus those that believe it will expand.

We also see more expecting their grocery spend to continue to increase (most likely due to rising food prices), while consumers still plan to cut back across key discretionary categories: entertainment; holidays; and consumer goods. The majority also expect their energy bills to increase, while most drivers expect fuel prices to stay the same or increase.

Nearly half believe their quality of life has deteriorated over the past year – the majority of these are unsurprisingly unhappy with their quality of life and very few of them expect things to improve over the next year. There is evidence that some are dipping into their savings or using borrowings (credit cards / loans) to fund day-to-day spending.

Despite a relatively supportive budget last October with cuts in income tax and an increase in state payments (including the energy credits), we see a fall in the proportion of people that are happy with the government’s handling of the cost-of-living crisis compared with six months ago.

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RED C Consumer Mood Monitor – April 2023