Deloitte Consumer Tracker: Confidence hits three year high
20 October 2014
- Consumer confidence highest since tracker began in Q3 2011
- Confidence in household income increased by 7 percentage points
- Spending on holidays in positive territory for first time in three years
- Increasing confidence driven by improving sentiment on levels of income and debt
Consumer confidence is at its highest level for three years, according to the latest Deloitte Consumer Tracker. Overall confidence is three percentage points higher than a year ago and 13 points higher than when the Tracker began in Q3 2011.
The biggest rise in positive sentiment was in household disposable income, which improved by 7 points year-on-year (from -25% in Q3 2013 to -18% in Q3 2014). Spending on essential items declined for the third successive quarter, allowing consumers to switch more of their spending to discretionary items. Significantly, net spending on holidays moved into positive territory for the first time since the Consumer Tracker began (from -15% in Q3 2011 to 4% in Q3 2014).
Ian Stewart, chief economist at Deloitte, said: “Even without growth in real incomes, consumer confidence has continued to rise. Lower oil prices and commodity prices and a strengthening pound have led to a sharp decline in inflation. An improving jobs market and lower inflation have been a real tonic for UK consumers. With inflation on a declining path and earnings heading up, the scene is set for a recovery in real incomes around the turn of the year.”
Ben Perkins, head of consumer business research, commented: “Increasing competition between the grocers, combined with lower commodity prices, have driven deflation in the food market, which has allowed customers to spend less on essentials. This leaves more in peoples’ pockets to spend on non-essentials like holidays, eating out and furniture.”
A strong job market has boosted confidence, with fewer consumers suffering a reduction or loss of income in Q3 2014 compared to last year (down from 12% in Q3 2013 to 11% in Q3 2014). This confidence appears to be long term, with 20% of consumers expecting an increase in their income in 2015, compared to just 11% who expect a decrease.
Perkins concluded: “Looking ahead to 2015, consumers appear in positive mood as they expect the value of their properties to continue to rise and their levels of debt to fall. The decline in the amount spent on essentials like food and utility bills is also expected to continue. However, with the prospect of higher interest rates, along with a cooling housing market, there are still concerns on the horizon.”
Notes to editor
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.
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
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The information contained in this press release is correct at the time of going to press.
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