The Deloitte Consumer Tracker Q1 2024

UK consumer confidence increased to its highest level since Q3 2021

The latest Deloitte Consumer Tracker shows UK consumer confidence rose to -11% in Q1 2024, its highest level in two and a half years. In a sign of growing optimism, the half-percentage-point rise in the index in Q1, although marginal, marks the sixth consecutive quarter of continued improvement in consumer confidence. It corresponds to a period that saw economic uncertainty easing, inflation falling and real wages rising releasing the pressure on consumer spending power. However, despite the overall improvement in the index, there are still some areas of concern. Although consumers are more positive about their financial position, confidence in disposable income remains significantly below where it was at the start of 2021 when consumers emerged from the pandemic with record levels of savings. Our data also shows that consumers have grown more negative about their job security and career progression than in the previous quarter.

The Deloitte Consumer Confidence Index1

Net % of consumers who said their level of confidence has improved in the past three months

1 Deloitte’s overall confidence index is the aggregate of six individual measures: level of disposable income, levels of debt, job security, job opportunities and career progression, children’s education and welfare, and general health and wellbeing.

Key takeaways for Q1 2024

  • UK consumer confidence increased for a sixth consecutive quarter, rising to its highest level in two and a half years. Since reaching an all-time low in Q3 2022 the Deloitte Consumer Confidence Index has risen by over nine percentage points to -11% in Q1 2024.
  • The rise in overall confidence was driven by quarter-on-quarter improvements in three out of six measures of confidence included in the index.
  • With falling inflation bolstering consumer finances and wage growth outstripping inflation, consumer sentiment towards their personal financial situation continued to improve in Q1. Our data shows that consumers were less pessimistic about their level of disposable income (+0.4 percentage points) and debt levels (+2 percentage points).
  • Consumers’ view on the state of the UK economy also deteriorated in Q1 falling by -2.1 percentage points compared with Q4 2023 after two consecutive quarters of improvement.
  • Consumers were also more negative about their job security and career progression than in the previous quarter. Sentiment about job security dropped two percentage points to -5%, its first fall after improving for four consecutive quarters. The measure of confidence in job opportunities and career progression also fell losing 1.4 percentage points to -5%.
  • As would be expected following the busiest trading quarter of the year for the consumer sector, in Q1 2024 overall net spending on non-essential goods and services fell by 3.2 percentage points to -5.1%. Meanwhile, overall net spending on day-to-day categories was up marginally (by 0.9 percentage points) compared with Q4 2023, partly thanks to easing inflationary pressures especially on food and energy costs.
  • Further evidence of a more upbeat consumer relates to attitudes to spending and finances. Compared with Q4 2023 the rate at which consumers have been increasing their more defensive behaviours eased. In a sign of consumers loosening their purse strings, there was also a lower net proportion of consumers decreasing their spending on making large purchases.
  • However, beyond the cyclical slower post-Christmas spending patterns, especially in the more discretionary categories, consumers could remain more cautious as a result of the shortfall in their purchasing power, the lag effect of rising interest rates, geopolitical uncertainties and the prospect of a general election.

Individual measures of consumer confidence

Net% of consumers who said that their level of confidence has improved in the past three months

*Please note this measure is not included in the overall index

Consumer spending in the last three months

Net % of UK consumers spending more by category over the last three months

Consumer attitudes to finances and spending in Q1 2024

Thinking about your financial situation and spending habits in the last three months compared with the previous four to six months, did you see an increase or decrease in each of the following, or did they remain about the same?

Cost reduction remains a big focus area and solutions to reduce cost, and increase productivity are key

Given the challenges of recent years it is perhaps unsurprising that, for all the good news, a degree of caution remains, especially among business leaders. According to Deloitte’s latest CFO survey, CFOs remain focused on controlling costs and building up cash. For now, expansionary strategies, such as capital spending and bringing in new products or services, are on the backburner. Indeed, some cost pressures on businesses persist, including the increase in the National Living Wage and non-domestic energy prices. In addition, inflation is still having an impact on some commodity prices notably those for cocoa, potatoes and coffee, and there are concerns about spring/summer crop yields due to saturated fields after record rainfalls.

Outlook for 2024

Overall, the start of 2024 has seen many consumer fundamentals improving including inflation falling, a reduction in national insurance, a 10% rise in the National Living Wage, UK house prices gradually rising, and lower home energy costs. In addition, the prospect of lower interest rates will support consumers borrowing to buy bigger ticket items. After, a difficult few years for the UK economy, and for the consumer sectors in particular, the worst of the downturn seems to be over and a recovery could be in sight. The prospect of warmer weather ahead, combined with consumer confidence at its highest in two-and-a-half years, should lead to a brighter outlook for the consumer economy in the months ahead.

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About this research

The Deloitte Consumer Tracker is based on a consumer survey carried out by independent market research agency, YouGov, on Deloitte’s behalf. This survey was conducted online with a nationally representative sample of more than 3,000 UK adults aged 18+ between 16th and 18th March 2024.

A note on the methodology

Some of the figures in this research show the results in the form of a net balance. This is calculated by subtracting the proportion of respondents that reported feeling more negative from the proportion that reported feeling more positive. For instance, assume that 30% of respondents reported they are spending more, 50% reported no change and 20% reported they are spending less. The net balance is calculated as 30% – 20% = 10%. This means 10% of consumers reported that they spent more rather than less.

Key contacts

Céline Fenech

Research Manager

Dominic Graham

Managing Partner Consumer