(Bloomberg) — UK consumer sentiment is at its highest level in three years, an encouraging sign for some retailers and travel companies ahead of the holiday shopping season.

Confidence rose from negative 5% in March to 0% this month, according to a PricewaterhouseCoopers LLP survey released Tuesday. The increase is a marked improvement from a record low of negative 44% in September 2022, when higher bills put household budgets under pressure.

The survey showed spending on travel, fashion and grocery seeing some of the most interest, with just over a fifth of Brits saying they plan to spend more on holidays and 13% on clothing, shoes and accessories.

UK inflation slowed to the Bank of England’s 2% target in May, but shoppers still showed reluctance to return to pre-pandemic levels of spending. Retailers are hoping for a boost over the Christmas period, when consumers tend to splurge.

There’s still lingering caution, however. Almost three quarters of Brits are planning to cut back on spending in the next three months — the same proportion as last year, according to the research.

“We still need to be mindful of the engrained consumer ‘cut back’ mentality that has developed over the past few challenging years and prioritization of experiences over material goods,” said Lisa Hooker, who leads consumer markets at PwC. 

“This means consumers will be selective about where they spend and where they cut back and so not all with benefit from this uptick,” she said.

The survey of 2,078 UK adults was conducted between July 5-8.

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