Deloitte Consumer Tracker - Consumer confidence suffers a setback for the first time in 12 months
27 January 2014
Consumer confidence suffered a dip last quarter (Q4 2013), for the first time in 12 months, according to the latest Deloitte Consumer Tracker. The net balance of sentiment fell slightly deeper into negative territory to -11% (vs. -8% in Q3 2013), highlighting the uneven nature of the recovery.
Ian Stewart, chief economist at Deloitte said: “In a sign of the headwinds facing the consumer sector, the number of pessimists continues to outnumber the optimists across all measures of confidence in our survey. Weak wage growth in particular is still putting pressure on household budgets. Recent gains in consumer spending have been largely fuelled by people dipping into their savings, higher levels of borrowing and lower inflation, rather than an increase in real disposable income.
“Nevertheless, we think this is a setback rather than a longer-term, underlying decline in confidence. Consumer sentiment is higher than it was a year ago and an accelerating economy and lower inflation should bolster consumer incomes in 2014.”
Falling inflation has helped reduce downward pressure on discretionary spending. Categories such as going out (-15% vs. -17%), clothing (-3% vs. -7%) and electricals (-2% vs. -4%) saw fewer people cutting back, compared to Q4 2012.
In addition, more consumers are planning to make major purchases including, property (5% vs. 3% in Q4 2012) and big ticket electrical items (9% vs. 7% in Q4 2012) in early 2014.
Ben Perkins, head of consumer business research, concluded: “Consumers are being selective, trading down in some categories, in order to be able to trade up in others. We saw this over the Christmas period as people bought value ranges in some product areas, so that they could treat themselves and purchase a few premium items in their preferred categories. Consumers have become savvy at managing their budgets and this is a new habit that is likely to stay.”
Notes to editors
About The Deloitte Consumer Tracker
The Deloitte Consumer Tracker is an economic update focussed on consumer spending attitudes and behaviours. Through a quarterly survey of 3,000 adult UK consumers it monitors the patterns of consumer expenditure on a category-by-category basis and the underlying drivers of spending behaviour, notably household disposable income and consumer confidence. It also considers consumers’ spending outlook for the next quarter.
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