Overall, consumer spending has been more volatile in recent months, showing both positive and negative trends. The latest Deloitte Consumer Tracker data shows that net spending on day-to-day categories was down in Q2 2025 as consumers reduced their spending on all essential categories except for the beauty and personal care category which continues to outperform all other essential categories in terms of growth. While the results are partly due to seasonality, with consumers turning off their heating after the winter, they are also a sign that consumers are trying to reduce their everyday expenditure in the face of persistent inflation in everyday categories like food and energy for the home.

The month of April is often dubbed as ‘Awful April’ as it coincides with many UK households facing increased costs due to rising energy, water, council tax and other household bills. By contrast, consumers in our survey reported increased levels of discretionary spending driven by a significant rise in spending on clothing and footwear, and more spending on holidays and socialising compared with both the previous quarter and the same period a year ago. But demand for bigger ticket items such as appliances, electricals and furniture remains slow as consumers stay prudent and prefer to save in the face of growing uncertainty about the job market. Results in the retail sector illustrate the same mixed picture, with stronger retail sales since the start of the year slowing in May before picking up again in June.

To understand spending sentiment better, our survey has been measuring consumer attitudes to spending in terms of expansionary and defensive behaviours. The results show that while on balance there is a higher proportion of consumers agreeing they have adopted more defensive behaviours, such as cutting down on luxury or treats and only spending on essentials, that net proportion is lower this quarter compared with the previous quarter. The same applies to expansionary behaviours such as spending more on experiences or spending more freely generally. While on balance there is a higher proportion of consumers disagreeing that they have adopted these more expansionary behaviours, the net proportion has reduced this quarter compared with the previous quarter.

Although the latest data suggests that consumer spending faced significant headwinds, a recovery could be underway. It is important to note that the situation remains fluid with unemployment rising in recent months. There are also some concerns including corporates’ demand for labour weakening due to rises in employer national insurance and minimum wages in April. Overall, more positive data will be necessary to talk about sustained growth in consumer spending.

Outlook for Q3 2025

Overall, according to our Tracker data, consumers expect to spend less on both day-to-day and discretionary categories in Q3, however, the picture is likely to remain mixed. Consumer products businesses will also be among those most affected by recent geopolitical developments. Tariffs announced by the US government could increase costs, potentially squeezing profit margins or forcing businesses to raise prices, which could dampen the recovery in demand. The combination of reduced consumer spending, rising costs and the potential impact of new tariffs suggests that the outlook for the consumer products sector will remain challenging in the coming months. Businesses may need to focus on cost management, innovation and strategic pricing to navigate these headwinds effectively. Research carried out for our 2025 Deloitte Consumer Products Outlook shows that top business performers in the sector differ from other consumer products companies in three areas: they invest more in managing their product portfolio and mix to entice the consumer, they invest in capabilities to stimulate demand including more micro targeting of consumers and they fund those investments by finding new efficiencies, especially through digitisation and automation.