Consumer confidence remained flat in the first quarter of 2025 with a marginal 0.3 percentage point increase, according to the latest Deloitte Consumer Tracker based on responses from 3,200 UK consumers aged 18+ between 14 and 17 March 2025. This marks a second consecutive quarter of stalled confidence following a two-year period of improvement.
A seasonal boost in sentiment towards general health and wellbeing (+3.8 percentage points) and small uplifts in job security and children’s education and welfare confidence (+0.8 percentage points, respectively) were offset by a decline in consumer sentiment towards their level of debt (-3.0 percentage points), household disposable income (-1.2 percentage points) and job opportunities and career progression (-0.5 percentage points).
Consumers cut back on treats and luxuries
Confidence towards disposable income fell in the first quarter of 2025, as three quarters (77%) of consumers agreed they spent more in the last three months because of rising prices, when compared with the previous three months. Similarly, almost half (47%) of consumers said they were only spending on essentials in the last three months, in a sign of inflationary pressures persisting. This comes as essential spending in the first quarter rose to its highest level since the Deloitte Consumer Tracker began in 2011.
Meanwhile, more than half (58%) of consumers said that they have been generally more frugal with their overall spending in the last three months compared with the previous quarter. Equally, more than half (54%) said they had consciously cut down on luxuries and treats in the same period. While consumers reported lower spending on non-essentials in Q1 2025 compared with the previous quarter, discretionary spending is higher than a year ago across all categories.
Celine Fenech, consumer insight lead at Deloitte, said: “The consumer recovery appears to have stalled despite continued strong wage growth, with uncertainty around the economy and other factors such as geopolitical tensions playing on the minds of consumers. As inflation persists, particularly on food and utilities, consumers are being more tactical in the way they spend, with a focus on essentials and looking for discounts and promotions when making purchases.
“Consumers remain nervous about how to manage the cost of living and therefore spending is likely to remain subdued and targeted. There will however still be parts of the consumer economy that perform better than others, and the arrival of better weather and seasonal events may prop up confidence and attract increased spending in the coming months.”
Consumer sentiment towards the UK economy falls
Consumer sentiment towards the state of the UK economy fell -3.5 percentage points. This drop in sentiment sees the level of confidence in the state of the economy fall to its lowest level since Q3 2023.
Ian Stewart, chief economist at Deloitte, added: “Amid high levels of global uncertainty, a more cautious UK consumer is likely to constrain the ability of businesses to pass on higher wage and other costs to customers. A revival in consumer spending will be dependent on the jobs market holding up and inflation pressures remaining contained.”
