UK consumers‘ sentiment about their level of disposable income rose six points in the last year to -33 per cent, according to new data released today.
Falling inflation and rising employment throughout last year has risen spirits, according to the latest Deloitte Consumer Survey, which surveyed 3,000 adults and found that consumers had the most positive outlook on discretionary spending for 18 months.
Between October and December 2012, consumers were less likely to cut back on cinema, theatre or concert trips, with the monitor standing at -17 per cent, down nine per cent on the same period in 2011, clothing, down 14 per cent to seven per cent and major household appliances, down four per cent to seven per cent over the period.
However, this improvement in sentiment does not correspond to consumers‘ savings, as 45 per cent of respondents said they had less money in their pocket than a year ago compared with 12 per cent who said they had more, outweighing the optimists by four to one.
Essential categories are subject to inflation and consumers remain cautious entering 2013, Deloitte noted, with 38 per cent anticipating a utility bill increase while 26 per cent expect the cost of groceries to rise in the year ahead.
Commenting on the figures, Deloitte Chief Economist Ian Stewart said: “Consumer spending rose modestly last year, even as the wider economy suffered a double dip recession.
“Lower inflation, improving credit conditions and rising disposable income are positives for the UK consumer.
“But the factors which fuelled the consumer boom of the ‘90s and ‘00s – steady economic growth, ultra low inflation, cheap and plentiful credit, and soaring house prices won‘t return soon.
“After the biggest consumer recession since the 1930s UK consumers remain very cautious. It is likely to take another five years for consumer spending just to get back to where it was in 2007.
“The worst may be past for the consumer, but any comeback will be long and slow.”
While the public remain uncertain about economic recovery, preparations were made over the festive season in order to spread the cost of Christmas, with 19 per cent buying items on sale before Christmas while 23 per cent increased online spend compared with 2011 in what Deloitte called “a digital tipping point”.
“Price and convenience continue to be key drivers for consumers when deciding where to spend,” explained Ben Perkins, Head of Consumer Business Research at Deloitte.
“With consumers spending more money online, shopping using smartphones and tablets will continue to increase, making those digital devices important sources of revenue for retailers.”