Economic concerns, ongoing pressure on essential household costs and consumer caution will continue to limit discretionary spending into 2026, research from KPMG UK’s latest Consumer Pulse survey reveals.

Deepening economic concerns shake spending confidence

While KPMG’s data shows that consumers’ outlooks for their own financial situations remained flat, there was a “steep decline” in sentiment towards the economy. 

Entering 2026, over half (56%) feel secure in their personal finances, dipping just -1% from the beginning of 2025. However, concern about the UK’s overall economic health deepened, with +15% more consumers believing the UK economy has worsened since the start of 2025 (43% vs 58%).

And this downbeat sentiment is prompting shoppers to take action to reduce spending. Half (49%) are cutting discretionary spend, over a third (36%) are now planning to save more and a further 34% are deferring big-ticket purchases. Over two fifths (42%) of consumers say they will buy no big-ticket items in the first quarter of 2026. 

“A landscape of consumers adjusting to higher household essential outgoings and spending caution due to perception of a worsening economy is set to continue into 2026,” commented Linda Ellett, Head of Consumer, Retail and Leisure for KPMG UK. “Annual consumer spending growth looks set to [be] sluggish again, with available discretionary budget prioritised.”

No let-up in AI adoption & re-sale popularity for 2026

The increasing use of AI by consumers was one of the key themes of 2025 – and this shows no signs of slowing down in 2026, according to KPMG’s data.

A fifth (19%) of consumers will use AI to track prices and for product search, making these the two AI use-cases likely to be the most adopted in 2026 shopping behaviours. There are also signs of growth for social commerce, with one in ten (10%) consumers planning to use social media more frequently to discover new products or services compared to 2025. 

“The growth of AI searching and social commerce looks set to continue in 2026, with consumers – particularly of younger age groups – becoming accustomed to finding products this way and businesses having to adapt their marketing strategies,” Ellett added.

The circular economy also looks set for a further boost; 21% of shoppers intend to buy more second-hand goods in 2026 versus last year – rising to a third (31%) among 18-24-year-olds.

“Pre-loved purchasing will also remain popular and retailers will have to continue to consider their involvement in the circular economy and the potential hit to new clothing and footwear sales,” Ellett concluded.