A new PricewaterhouseCoopers LLP survey reveals nearly a third of British consumers are expected to reduce spending this holiday season due to a cost of living crisis that continues to wreck household finances, according to Bloomberg.
PwC's survey indicated that nearly 80% of those planning to cut back on spending are doing so because of elevated food and energy costs. Around 20% attribute it to increased shelter costs, like mortgage or rental payments.
It said only 18% of respondents expect to spend more on Christmas this year, while slightly more than half expect spending to remain the same.
"With shoppers wanting to protect spending on family and special occasions, they are starting preparations early and being cautious, with over a third of consumers planning to shop before the peak festive trading times, and many also saying that they will spend less," Lisa Hooker, leader of the industry for consumer markets at PwC said.
Even though headline inflation will likely ease again in September, Bank of England Chief Economist Huw Pill said sticky inflation could result in a "persistent" monetary response, increasing the odds that BoE has not yet reached the peak of the hiking cycle.
High inflation has crushed consumer sentiment. PWC's most recent sentiment survey printed around -13, unchanged from the summer and still at a low from one year ago.
Given the downbeat sentiment among consumers, Britain's biggest retailer, Tesco, recently gave a positive outlook about the holiday shopping season. Also, retailers, including Sainsbury's and Marks & Spencer, plan to hire thousands of temporary workers.
A deteriorating labor market, high inflation, a slowing housing market, higher interest rates, and dampening real wage growth are all a perfect recipe for increased recession risk.
