Q2: Five key insights from the Baringa Consumer Spending Outlook 2025

In our latest Q2 2025 outlook, we've revised down annual UK consumer spending growth to 1.2%, from 1.5% in Q1, amind stronger inflation and a slower rate-cuttng cycle. Still, this marks an improvement from 0.7% in 2024. 

In our latest report we identify key emerging trends:

1. Young homeowners lead the way, with projected spending up 2% year-on-year
2. Restaurant spending is marking a comeback, afer years of subdued economic activity during the cost of living crisis
3. Recreation and holiday spending remains resilient
4. Clothing is bifurcating - value brands like Primark are outperforming mid-tier rivals, while luxury remains steady
5. Supermarket spend is slowing, likely ending the home indulgence trend​

These shifts reinforce the need for granular, segment-level consumer insights in a volatile macro landscape as spending cnditions in the spening review are expected to signal a deteriorating fiscal picture for the government with further tax rises or spending cuts on the horizon.​

Report in brief

In our Q1 2025 report, we forecasted that UK consumer spending would grow by c1.5%. Recent economic revisions of growth and fears around trade relations have led to a slower growth expectation at c1.2% in our latest Q2 outlook. This remains stronger than the 2024 actual spend growth of 0.7%. 

Our revised assumptions come predominantly from stronger inflationary pressures which are set to generate a slower rate cutting cycle from the Bank of England. As a result, households are expected to have less benefit from falling mortgage costs than our Q1 forecast over 2025. 

Our latest outlook shows that, while we expect economy wide spending growth to be at 1.2%, there is significant variation across consumer groups as households experience economic recovery asymmetrically across region, income level, age, and family composition. For example, young homeowners are likely to experience the highest growth in spending from 2024 at 2%, compard to an economy wide increase of 1.2%. 

Recreation on the rise

Navigating constant change to reach real value

Retailers and CPGs must keep their fingers on the pulse of consumer trends and pivot fast when conditions change. Achieving this level of insight and agility demands reliable data and flexible processes. Baringa can help you build both. Blending unique resources like our Consumer Spending Model with deep consumer products and retail expertise, we allow you to understand how consumers are thinking, feeling, and acting. 

Working alongside your teams, we help your business harness the latest consumer and market insights to shape sharper strategies and operating models - driving value and growth for your business in an ever-changing world.

If you're interested in exploring more insights from Baringa's Consumer Spending Model, or if you'd like to discuss how we can help refine your strategy and operations, get in touch with us today.