UK households bracing for new cost of living crisis, report finds | UK cost of living crisis
British households are bracing for a new cost of living crisis as the impact of conflict in the Middle East reduces confidence in the economy and personal finances, a survey has found.
Consumer confidence in the UK has fallen at the fastest rate in the last three months since June 2022, when inflation rose in the UK as a result of Russia’s invasion of Ukraine and a rise in commodity prices.
Accounting firm PwC’s quarterly survey, which measures factors such as consumers’ spending intentions and how well they feel, recorded a score of -13 in April; This was a sharp decline from -1 in January and the lowest level since autumn 2023.
PwC said confidence in household finances had fallen across all age groups, but young people were still more optimistic than older people, although there was a 20 per cent fall in under-35s feeling financially healthy and a 9 per cent increase in those struggling or in trouble with their bills and finances.
Almost 90 percent of the 2,068 consumers surveyed by PwC said they were concerned about the cost of living, and almost 80 percent said they planned to cut spending in the next three months. The proportion of those who say they will drive less to save on rising fuel costs has doubled since January, from 12% to 24%.
“Rising costs are pushing shoppers to pull back on spending across the board, and confidence is expected to worsen before getting better as consumers face higher energy and food costs later in the year,” said Sam Waller, sector leader for UK consumer markets at PwC.
The PwC report mirrors other consumer confidence surveys; Data firm GfK also reported last month that UK consumer confidence fell to its lowest level since October 2023 in April amid the mounting economic fallout from the Iran war.
This also reflects the situation in the US after data on Friday showed consumer confidence falling to a new record low due to concerns about higher prices.
The Bank of England said last week that high inflation in the UK would be “inevitable” due to conflicts in the Middle East, which would increase fuel, food and energy prices.
The latest figures from the Office for National Statistics showed that the UK inflation rate, as measured by the consumer price index, rose to 3.3% in March from 3% in February, well above the Bank’s 2% target.
Consumer-facing businesses, such as the hospitality industry, are hoping this summer’s World Cup will provide a welcome boost to business; He hopes the jet fuel crisis could help domestic hotels if there is a surge in accommodation because flights are canceled or become too expensive.
Consumer confidence is also influenced by people’s concerns about their jobs. A separate report by KPMG and the Recruitment and Employment Confederation said there was a steeper decline in permanent staff appointments across the UK in April compared to the previous two months. The report stated that this was due to “increased market uncertainty due to the war in Iran and rising operating costs.”
Job openings also decreased in April, falling for the 30th consecutive month. However, according to the survey, the rate of reduction in personnel appointments was weaker than the average recorded in 2025 and was generally moderate.
The report suggested that employers are instead relying more on flexible working, with temporary bills experiencing the strongest rise in two-and-a-half years and the first increase in three months.
