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Oct 25, 2021
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Xmas spending set to dip says new negative UK consumer confidence report

Published
Oct 25, 2021

It’s no surprise that another UK consumer confidence indicator (released Monday) was negative and the outlook for Christmas spending is weak as prices rise. But at least this assessment from Deloitte didn’t paint as bleak a picture as GfK’s Friday assessment.


UK consumer confidence dipped in Q3


According to the Deloitte Consumer Tracker (based on 3,185 UK consumers interviewed between 17-20 September), confidence fell by just one percentage point in the third quarter, but notably, it was the first quarterly fall recorded this year.  

Of course, the new report again cited reduced optimism around personal finances, specifically in the level of debt (down two percentage points to -4%) and household disposable income (down nine percentage points to -21%).

As an indication that prices in both discretionary and essential categories are also beginning to creep up, the report noted that 36% of consumers said their overall spending had increased in the last three months, ”primarily driven by rising utility bills and transport spending as more workers returned to offices”.

Worst of all, as prices continue to rise, respondents also indicated that they expect to reduce their spending over the next three months, including over the festive period, from its current peak, with consumers’ discretionary spending in Q4 anticipated to fall by five percentage points compared to Q3. 

However, the report did note that this represents a ‘normalisation’ of spending patterns going into the retail sector’s ‘golden quarter’, coming down from second and third-quarter highs.

Ben Perkins, head of consumer research at Deloitte, said: “Whilst overall confidence remains at the same level as Q3 2019, thus maintaining pre-pandemic confidence levels which returned last quarter, the end of furlough, removal of universal credit top-ups, and rising inflation have contributed to a quarterly fall.”

Perkins added: “Following the cancellation of many Christmas plans last year due to the pandemic, consumers demand remains very strong and many will be looking to make up for missed celebrations. However, consumer behaviours are already reflecting concerns on the availability of some goods, with early birds already making a start on their Christmas shopping to avoid possible disappointment.

“For retailers, an extended Christmas shopping period is in many ways beneficial, spreading demand over a longer period, smoothing peaks and potentially reducing the need for price discounting. In anticipation of ongoing supply chain disruption, some retailers have brought Christmas merchandise to shop floors earlier to ensure consumers can find what they need for the festive period. However, others may be subject to longer-term disruption, potentially creating shortages in more popular party season and gifting categories, including clothing, toys, and furniture.”

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