Consumer sentiment about disposable income has risen nine points to -31 per cent in the first quarter of 2013 compared with the same period last year, figures released today reveal.
According to the Deloitte Consumer Tracker, improved sentiment can be seen across several measures over the period and consumers are the most optimistic they have been over disposable income since the tracker began in 2011.
Although disposable incomes remain under pressure and are still the primary concern for consumers, confidence around debt levels and job security both improved by three points compared with the previous quarter while concerns over personal debt has nearly halved since the tracker began.
“The macroeconomic environment for consumers is beginning to improve, albeit very slowly,” explained Deloitte‘s Chief Economist Ian Stewart.
“Employment levels are up compared to last year and credit availability has improved. Mortgages have become increasingly available, in part as a result of the Bank of England‘s Funding for Lending and the Government‘s First Buy and Help to Buy schemes.
“Inflation has fallen sharply from the peaks seen in late 2011 and this has lent some support to consumer spending power.”
Although disposable income sentiment has improved over the period, discretionary spend “remains subdued” despite moderate increases in some categories.
Sentiment on purchasing clothing & footwear stood at -17 per cent compared with -23 per cent a year earlier and sentiment for purchasing major household appliances hit -8 per cent compared with -12 per cent during the same period last year, though rising energy prices saw consumers spend more on utilities over the quarter.
Stewart explained: “One factor holding back consumer discretionary spending is the still elevated level of inflation and concerns about the pace of price rises over the coming months.
“Certainly, the Bank of England anticipates further upward pressure on inflation through to the middle of this year.”
As this upward pressure continues to affect spending power, defensive spending strategies are on the increase with a fifth of shoppers spending less in the last quarter, favouring bargains and discounts in a bid to save.
Ben Perkins, Head of Consumer Business Research at Deloitte said: “The continued rise in discount shopping shows consumers have focused on rebuilding their balance sheets and have developed strategies for making their money go further.
“Technology advancements have armed shoppers with more data to help them find the best deal. They are better educated and savvier than ever when deciding where to spend their money.
“We have also seen a polarisation of the consumer market, with growth in the value and luxury sectors.
“Often the same consumers are shopping at both ends of the spectrum demonstrating the importance they place not only on price but also on the retail experience.”