Discretionary spending hit as household cost pressures continue to mount
Latest findings from KPMG UK's Consumer Pulse survey
Latest findings from KPMG UK's Consumer Pulse survey
Four in ten consumers say they’ve cut back on non-essential spending, reducing their monthly discretionary budget by £77 on average compared to the start of the year, according to KPMG’s quarterly Consumer Pulse.
The latest figures from the survey of 3000 people across UK regions shine a light on consumer behaviour and sentiment with nearly half of 2024 gone, and as the country heads into the final weeks before the general election.
The scale of essential cost pressures has even seen 5% of consumers reporting that they have reduced their monthly non-essential spending by over £200 compared to when 2024 began. On average, those aged 25 to 34 say they’ve made the highest monthly cut to their discretionary spending.
The findings also show the divide that household cost pressures are having on consumer confidence. A quarter of consumers feel less secure about their financial circumstances than when the year began, but a quarter feel more secure.
Commenting on the findings, Linda Ellett, UK Head of Consumer, Retail and Leisure for KPMG, said: “Our research clearly indicates that many households have had to continue to find ways to cut non-essential spend so far this year, with some making sizeable cuts as they adapt to or prepare for significant cost hikes, such as a remortgage or rent increase.
“Slowing inflation does not mean that consumers are seeing a reduction in prices and costs, and the overall squeeze on many monthly budgets continues.
“Consumers are cutting back spend through seeking out cheaper brands or promotional offers, buying fewer items, and by restricting the everyday treats such as eating out.”
Eating out (67%), clothing (59%), and takeaway food (56%) are the three most common cost-cutting targets for those reducing non-essential spend. While a third have reduced spend on beauty products, with a quarter cutting back on TV or music streaming services.
The 3000 consumers were also asked about what steps they are taking when shopping to save money, with:
- 32% saying they are buying more promotional / discount produce.
- 31% saying they are buying fewer items.
- 31% saying they are buying more own brand / value goods.
- 30% saying they are using loyalty schemes more.
- 27% saying they are buying more lower price branded goods.
- 25% saying they are shopping more at lower cost retailers.
- 18% saying they are buying more pre-owned goods. Rising to 24% in the South West.
- 13% saying they are using credit card more. Rising to 19% in London.
A fifth said they had switched brands on frozen foods, fresh produce, and clothing, respectively. While one in ten reported switching their insurance, mobile phone, or broadband provider.
The top five big ticket purchases so far in 2024 are:
- Holiday: 30%
- Home improvements: 14%
- Personal tech: 13%
- Home appliances: 12%
- Petrol or diesel vehicle: 8%
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Appetite to use savings during the rest of 2024 for big purchases was limited, but 35% said they would use some for a holiday, while a quarter said they would do so for home improvements.
Also looking ahead to the rest of the year, 22% of consumers said they expected to feel more financially secure, while 19% said they would feel less so.
Linda Ellett added: “As we head toward the election, many households are still adapting to higher costs, consumer confidence and feeling of financial security are clearly divided, and there remains limited appetite to make major purchases. This is the landscape facing the next government as they develop their future economic policy.”
ENDS.
Notes to Editors
One Poll, a member of the British Polling Council, surveyed 3000 UK consumers online between May 23 and 28 2024 for KPMG UK.
The following questions were posed to 3000 consumers, unless it says otherwise:
How financially secure do you feel compared to when 2024 began?
- Much more secure: 5%
- Slightly more secure: 19%
- No more or less secure: 52%
- Slightly less secure: 15%
- Much less secure: 9%
- Prefer not to say: 1%
How are your essential costs (e.g., mortgage/rent, energy, fuel, food) affecting the rest of your spending so far in 2024? Compared to when 2023 ended.
- I have had to cut back my non-essential spending: 42%
- My non-essential spending levels remain the same: 49%
- I have been able to increase my non-essential spending: 5%
- Not sure: 5%
To 1251 Consumers (who have cut non-essentials): Compared to when 2024 began, how much less on average are you spending on monthly non-essentials?
- £1-10: 3%
- £11-25: 9%
- £26-50: 17%
- £51-75: 12%
- £76-100: 13%
- £100-150: 9%
- £151-200: 4%
- £201+: 5%
- Not sure: 25%
- Prefer not to say: 2%
To 1251 Consumers (who have cut non-essentials): Since 2024 began, which of the following non-essential spends have you reduced your spending on? (Select all that apply)
- Eating out: 67%
- Clothing: 59%
- Takeaway: 56%
- Food and drink shopping 42%
- Leisure Travel / Holiday(s): 38%
- Beauty products and services 35%
- Experiences: 32%
- Home improvements: 31%
- TV or music streaming services: 26%
- Technology: 21%
- Non-commuting vehicle/transport use: 16%
- Fitness and exercise: 16%
- Meal delivery kits: 15%
- Children’s clothing and toys: 11%
- Pet products: 10%
- None of the above: 2%
To 138 Consumers (who have increased non-essentials): Since 2024 began, which of the following non-essential spends have you increased your spending on? Top five:
- Leisure Travel / Holiday(s): 43%
- Food and drink shopping: 33%
- Eating out: 32%
- Clothing: 30%
- Home improvements: 28%
Which, if any, of the following have you done more of when shopping so far in 2024, compared to when 2023 ended? (Select all that apply)
- 32%: Buying promotional or discounted items
- 31%: Buying own brand / value products
- 31%: Buying fewer items
- 30%: Making use of retailer loyalty schemes to get lower prices
- 27%: Buying lower price branded produce
- 25%: Shopping at less expensive retailers
- 22%: Shopping at multiple stores to find products at their lowest cost
- 18%: Buying pre-owned items
- 15%: Cancelling monthly subscriptions
- 15%: Use savings when making purchases
- 13%: Shopping instore rather than online
- 13%: Switch products due to quantity shrinking but price remaining the same (shrinkflation)
- 13%: Use credit card(s) when making purchases
- 12%: Shopping online rather than instore
- 9%: Choosing lower cost monthly subscriptions
- 8%: Use buy now pay later when making purchases
- 6%: Buying products or services due to their sustainable or ethical credentials
- 23%: None of the above
Have you switched to a cheaper brand in any of the following categories so far in 2024 to save money? (Select all that apply)
- 22%: Frozen food
- 20%: Fresh produce (fruit, vegetables, meat, bread, dairy)
- 18%: Clothing
- 14%: Eating out
- 12%: Non-perishables
- 11%: Insurance cover
- 10%: Alcohol
- 10%: Beauty products & services
- 9%: Mobile phone contract
- 9%: Takeaways
- 9%: Broadband provider
- 7%: Energy provider
- 7%: Pet products
- 6%: Travel/Holiday
- 6%: TV & music streaming services
- 5%: Satellite or cable TV provider
- 5%: Home improvements
- 5%: Technology
- 5%: Children’s clothes & toys
- 4%: Fitness & exercise
- 3%: Meal delivery kits
- 3%: Vehicle
- 38%: None of the above
Have you bought any of the following ‘big ticket’ items so far in 2024? (Select all that apply)
- 30%: Holiday(s) (including booked but not yet taken)
- 14% Home improvements (e.g., redecorated)
- 13%: Personal technology (e.g., mobile phone, laptop)
- 12%: Home appliances (e.g., fridge)
- 8%: Home electronics (e.g., TV)
- 8%: A petrol or diesel vehicle
- 4%: A battery electric vehicle
- 4%: A home.
- 44%: None of the above
Are you currently having to use your savings to help meet your essential household costs? (e.g., food, energy, fuel, mortgage/rent)
- Yes: 23%
- No: 68%
- N/A – I don’t have savings: 9%
To 2735 Consumers (with savings): Which, if any, of the following do you plan on spending savings on in the rest of 2024? (Select all that apply)
- 35%: Holiday(s)
- 23%: Home improvements
- 16%: Paying essential household costs (e.g., food, energy, fuel, mortgage/rent)
- 9%: Home appliances
- 7%: Moving home
- 7%: Paying down the existing mortgage
- 7%: Technology (such as mobile phone)
- 7%: A petrol or diesel vehicle
- 6%: Home electronics
- 4%: A battery electric vehicle
- 24%: N/A – I don’t plan to spend any of my savings in 2024
- 11%: Not sure
So far in 2024, what have been your top three considerations when purchasing goods and services?
- 77%: Price
- 60%: Quality
- 25%: Convenience
- 22%: Loyalty benefits
- 15%: Customer experience
- 12%: Environmental sustainability
- 6%: Data privacy
- 2%: Other ethical considerations
- 1%: Other
- 7%: Don’t know
Looking ahead to the rest of 2024, how do you expect your feeling of financial security to change?
- Much more secure: 4%
- Slightly more secure: 18%
- No more or less secure: 57%
- Slightly less secure: 13%
- Much less secure: 6%
- Prefer not to say: 2%
Media contact:
Steven Reilly-Hii, Media Relations Manager, KPMG LLP, E: steven.reilly-hii@kpmg.co.uk , T: 07510 376635.
About KPMG UK:
KPMG LLP, a UK limited liability partnership, operates from 20 offices across the UK with approximately 18,000 partners and staff. The UK firm recorded a revenue of £2.96 billion in the year ended 30 September 2023.
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