Having had a chance to eat far too much, spend much needed time with family to rest and recuperate over the Christmas Break we thought we’d start the New Year by taking a future look at budgetary considerations, changes and trends that will continue to affect customers, and how we engage with them through 2026.
Contemplating what’s new and what’s changed, or not, in the wider world around us, here, we consider what financial factors are influencing customer behaviour, and how businesses can act to support their clientele.
Designing customer experience to meet customer needs
As 2026 begins, the mood remains muted amongst most UK households and consumers, who are facing continued pressures from cost of living, and a general sense of uncertainty around financial security. Inflation has been easing from its double-digit peak, and the Bank of England has begun to cut interest rates, but core cost increases and rising unemployment mean many are still very cautious about discretional spending.
As a new year begins, many businesses will be considering their approach to customer experience, and how they might amend it to meet their goals and objectives. Considering those actions through the lens of the customer, the pressures they are under, and how you can help them address their concerns to improve business performance, could set you apart from competitors who are laser focused on indiscriminate cost-cutting.
Prices are cooling — some of them, anyway
Headline inflation has been tentatively falling through late 2025 – notably the Consumer Prices Index (CPI) slowed to 3.2% in the 12 months to November. Although that heralds some progress, it remains well above the Bank of England’s 2% target, and ultimately just means prices are rising at a slower rate than before. For most people on the ground, it’s not making a lot of difference in the round, with everyday costs still at daunting levels. What that most likely means is that discretionary spending will stay constrained for many households, especially while growth in pay lags behind.
Borrowing costs create a mixed picture for borrowers and savers
On 18th December the Bank of England cut interest rates to 3.75%. That should eventually bring down borrowing costs, including some tracker mortgages and consumer credit. In theory, that would allow people to spend more on other things. However, this is an action that gives with one hand and somewhat takes away with the other as homeowners on fixed higher-rate deals will not see a change until they remortgage, and savers can expect deposit rates to fall.
Energy bills remain a headline worry
Energy bills have been in the headlines almost consistently since Russia’s invasion of Ukraine, acting as the proverbial poster child for the cost of living crisis. In December it was announced that Ofgem’s energy price cap was set to rise by 0.2% for 1st January to 31st March 2026, setting a typical household annual bill at around £1,758.
While the rise is fairly small, for overstretched households it is another push in the wrong direction, and a reminder that energy costs are still a concern for most households. The continued uncertainty around the world, means that we all remain on tenterhooks about future volatility and the need to budget accordingly. It’s an issue that impacts both individuals and businesses, adding a point of consideration for both B2C and B2B organisations.
The persistent squeeze on food and essentials
Higher food prices are one of the factors keeping inflation toppy as we head into 2026. The OBR and other forecasters single out food and services as pressure points that may keep inflation above normal levels, and for many consumers groceries and household essentials account for the majority of spending, so small price rises hit harder than they might otherwise.
As a result, consumers continue to hunt for discounts, cost-efficiency, and good value, reducing the number of non-essential purchases. However, that shouldn’t be misconstrued as forcing businesses into a race to the bottom. Research and experience shows that businesses that prioritise good value and a trusted customer experience often outperform bargain basement brands both long- and short-term.
In addition, the ‘lipstick effect‘ proves time and again that in periods of economic downturn consumers might cut back on luxuries, but still seek out small indulgences, in which they prioritise quality experiences. Refocusing your customer experience strategy to deliver sustainable value for customers is a key strategy for survival in fluctuating economic conditions.
Consumer debt, credit and fraud
Household debt ratios have come down from their peak seen during previous years, but consumer credit trends remain mixed and vulnerable to economic shifts.
Meanwhile, fraud and scams are said to be rising in scale and sophistication, with industry figures showing hundreds of millions stolen in 2025 alone – a trend driven partly by AI-assisted phishing and increasingly convincing impersonation attacks.
For businesses, that means creating a reputation for trust, building relationships with customers based on meaningful actions, and demonstrably secure systems is more important, and indeed more valuable, than ever.
An opportunity to support consumers
The UK is hopefully moving away from many aspects of the cost-of-living crisis, but 2026 still feels tough for many households and businesses. Falling headline inflation and early interest rate cuts are no doubt welcome, but lofty energy and food prices and rising fraud combine into a complex and fragile picture.
Businesses that are mindful of customers’ reduced ability to spend, might feel under pressure to cut prices where it’s not commercially viable. However, looking at ways you can add value instead could be a better approach to ensuring customer loyalty and commercial sustainability.
CGA are Navigators of Experience, helping brands achieve greater customer loyalty and retention through empathy, engagement, and customer centric transformation.
