The latest Deloitte Consumer Tracker shows that consumer confidence rose for the third quarter in succession in Q3 2014, reaching a three-year high and taking another step closer to positive territory. Consumers’ confidence regarding their disposable income, levels of debt and job progression has all increased this quarter, and year-on-year increases across five of our six measures of confidence were seen this quarter.
Consumer confidence has continued a gradual climb and continues 3 points higher than a year ago
Demand remains robust, with consumer spending up by 2.1 per cent in the first quarter of 2014. Consumer spending on essential items continues to decline this quarter, allowing consumers to switch more of their spending to discretionary categories. This quarter net spending on holidays moved into positive territory for the first time since the survey began in Q3 2011.
Fewer consumers suffered a reduction or loss of income in Q3 2014 than a year earlier, continuing the downward trend. This is another sign of less pressure in the labour market.
An increase in unsecured lending has helped boost the consumer sector in the absence of real wage growth, but other factors such as declining inflation, lower oil prices and a generally strong pound have also helped mitigate the situation.
Looking ahead to 2015, consumers are optimistic as they anticipate that their debt levels will fall while the value of their properties will rise. Fewer consumers expect to spend more on food or grocery prices to rise. However, two areas of concern remain: the prospect of higher interest rates as well as higher taxes.