Insights

The Deloitte Consumer Tracker Q2 2017

Consumer confidence falls to its lowest level in over two years

July 2017

Consumer confidence has fallen for the third quarter in a row in the second quarter of 2017, a sign that the squeeze in living standards is starting to dent consumers’ spirits with inflation hitting its highest level in four years and wages dropping in real terms for the first time in three years.

Consumer confidence continues to fall

Consumer confidence has fallen by three percentage points (-7% to -10%) in the second quarter of 2017, representing the biggest decline in over two years. Five out of the six measures which make up the confidence index decreased this quarter. The biggest declines were seen in confidence in disposable income and level of debt, which fell by seven and four percentage points respectively.

Squeeze in living standards puts dent in consumers’ spirits

With inflation rising to its highest level in four years and the first decrease in real wages in three years, the pressure on disposable incomes is starting to show. Consumers are beginning to reduce their expansionary behaviours, with spending on essentials dropping 4 points this quarter and discretionary spending down by 3 points.

Looking ahead

The prospect of the UK leaving the EU continues to influence the outlook for growth. However, with unemployment currently at its lowest rate since 1975 and consumer credit increasing as a result of cheap debt, the question still remains as to whether these factors will be sufficient to ensure consumer spending slows rather than collapses before the end of 2017.

Deloitte Consumer Tracker Q2 2017

A note on the methodology

Some of the figures in this research show the results in the form of a net balance. This means that in a survey of 100 respondents, assume that 30 reported they are spending more, 50 reported no change and 20 reported they are spending less. The net balance is calculated by subtracting the number that reported they spent less from the number that reported they spent more, i.e. 30 -20 = 10. This means 10% of consumers reported that they spent more rather than less.

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