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Deloitte reveals dip in consumer confidence

Jul 18
 
Tags: Deloitte
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Deloitte reveals dip in consumer confidence

Declining consumer confidence is one challenge consultants working in UK retail and other sectors might have to overcome this year, research by Deloitte has indicated.

In its latest Consumer Tracker report, the firm revealed that during the second quarter of 2017, UK consumer confidence fell by three percentage points from the previous quarter, from -7 per cent to -10 per cent.

The quarterly drop is the biggest recorded for more than two years and confidence has now been on a downward trend for three consecutive quarters.

Deloitte recorded falls in five of the six measures that make up the confidence index. Consumer optimism around disposable income and levels of debt declined by seven percentage points and four percentage points respectively.

Inflation recently increased to 2.9 per cent, its highest level in four years, while earnings growth is around two per cent. As a result, consumer spending power is decreasing for the first time in three years.

Ian Stewart, chief economist at Deloitte, said this living standards squeeze has "dented consumers' spirits".

However, he also stressed there are a number of reasons for consumers and businesses to feel positive.

"Unemployment is at a 40-year low, the employment rate has never been higher and interest rates - and debt funding costs - are at rock bottom levels," Mr Stewart noted.

Furthermore, sentiment about job security, employment opportunities and career progression has improved from last year.

Ben Perkins, head of consumer business research at Deloitte, also highlighted reasons for optimism, such as healthy competition among retailers, which are trying to attract and retain customers with discounts, lower pricing and loyalty programmes.

"Retailers will also know that it doesn't take much to give consumers a boost," he added. "Even a dry, hot summer may be a sufficient catalyst to lift consumer spirits in the short term."

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Image: iStock/dobok

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