UK Consumer confidence falls for third consecutive quarter

By

Barbara Santamaria

Published
Jul 19, 2017

UK consumer confidence fell by three percentage points to -10% in the second quarter of 2017, the biggest quarterly decline in more than two years, according to the latest Consumer Tracker report from Deloitte.

The drop was driven by a quarterly drop in five out of the six measures that make up the confidence index. The results are part of a quarterly survey of 3,000 UK consumers, carried out between 16 and 18 June 2017.

Deloitte said consumer confidence fell to -10% from -7% in the first quarter. The indicator has now fallen for three consecutive quarters.

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“A squeeze in living standards has dented consumers’ spirits. With inflation rising to 2.9% in June, its highest level in four years, and earnings growth around the 2.0% mark, consumer spending power is shrinking for the first time in three years,” said Ian Stewart, chief economist at Deloitte.

“However, we shouldn’t lose sight of the fact that some big things are going right for consumers. 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. Consumers are feeling the pinch from higher inflation, but the Tracker shows that sentiment about job opportunities, career progression and job security are higher than they were a year ago,” he continued.

DISCRETIONARY SPENDING

The current economic climate has also impacted consumer spending, revealed the Consumer Tracker. Spending on essential items fell by four points to 8% in the second quarter, while discretionary spending fell by three points to -7%.

Ben Perkins, head of consumer business research at Deloitte, said that whilst consumer spending is slowing, we are “far away” from a total drop-off as record levels of employment and cheap borrowing continue.

“Retailers are remaining competitive and are actively trying to help consumers through lower pricing, discounting and clever loyalty programmes," he said.

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