Consumer confidence shows resilience despite spending pressures
29 January 2018
- Consumer confidence remains at -7% in Q4 2017, flat from the previous quarter;
- It is the first time since 2011 that confidence did not fall in the final quarter of the year;
- Consumers are more confident about levels of disposable income and job security compared to Q3 2017;
- The Deloitte Consumer Tracker measures UK consumer confidence on a quarterly basis.
UK consumer confidence remained flat in Q4 2017 compared to the previous quarter, according to the latest Consumer Tracker report from Deloitte. Combined with a three percentage points rise in Q3, overall consumer confidence in the UK rose in the second half of 2017, with consumers showing resilience despite being faced with spending pressures.
The quarterly survey of more than 3,000 UK consumers, carried out between 5 and 10 January 2018, saw overall consumer confidence remain flat at -7% in Q4 2017. The results represent the first time that confidence has not fallen in the final quarter of the year since the Tracker began in 2011.
According to the Consumer Tracker, confidence in the level of disposable income rose by four percentage points compared to the previous quarter. Consumer confidence around managing personal levels of debt also rose from Q3, by one percentage point.
With UK unemployment at its lowest since the 1970s, the Tracker revealed record levels of confidence in relation to job security, rising by three percentage points to -4%. However, consumers were less confident about job opportunities and career progression, which fell by two percentage points from Q3.
In addition, and as expected for the time of year, consumers felt less optimistic about their health and wellbeing compared to the previous quarter, with confidence falling by three percentage points.
Ian Stewart, chief economist at Deloitte, said: “Despite a fierce squeeze in spending power last year, consumers went into 2018 in pretty good spirits.
“Low interest rates and plummeting unemployment mean that it’s not all been bad news for consumers.
“With record levels of job vacancies and an economy that continues to grow we would expect wage growth to edge higher this year as inflation eases. The worst of the squeeze on incomes is probably behind us.”
The latest Consumer Tracker also revealed the extent to which spending has been under pressure. The continued squeeze on spending has caused consumers to be more careful about their spending with discretionary spend falling by one percentage point compared to the previous year. By contrast, price inflation has seen spending on essential items rise by two percentage points year-on-year.
Ben Perkins, head of consumer business research at Deloitte, commented: “On the surface, it is reassuring to see that there has been a quarterly rise in spending for both essential and discretionary categories. But if you scratch deeper then you quickly realise that inflation has been a key driver for the rise in essentials spending: consumers are buying the same but are paying more for it compared to a year ago.
“At the same time, discretionary categories have seen demand fall but Black Friday and pre-Christmas promotional shopping helped tempt consumers to spend. Retailers have to have a fluid pricing strategy in order to entice spending, which could impact margins in the short term.
“We typically see a dip in confidence in the final quarter of the year, with consumers being surveyed at a time when they are conscious of their spending levels and health after the festive period. So the fact that confidence has remained flat is a clear indication that the UK’s consumers are remaining resilient to spending pressures.
“One important observation is that consumers are starting to show more confidence about their personal levels of debt. The hope is that this is a sign of consumers taking control of their debt, rather than an acceptance that it exists.”
Note to editors
About the 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 5 and 10 January 2018.
In this press release references to “Deloitte” are references to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”) a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see deloitte.com/about for a detailed description of the legal structure of DTTL and its member firms.
Deloitte LLP is a subsidiary of Deloitte NWE LLP, which is a member firm of DTTL, and is among the UK's leading professional services firms.
The information contained in this press release is correct at the time of going to press.
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