Consumer spending falls as confidence wanes
New research has revealed consumer spending fell in the third quarter of the year because of fragile confidence in the UK economy.
According to the Deloitte Consumer Tracker, consumer confidence in the UK was reported at -10% in the months July to September.
Meanwhile confidence in household disposable income dropped 0.5% to -28%, and sentiment in the wider UK economy fell by 13% to -64%, which is a two-year low and 26% down on the same period in 2024.
Based on responses from 3,200 consumers, overall consumer spending on essential items fell by 0.4% and on discretionary items by 0.6%, with 47% of respondents they are only spending money on essential items now.
Inflation
Oliver Vernon-Harcourt, head of retail at Deloitte UK, said: “As inflation persists, particularly across food items, it is understandable that some consumers are feeling less optimistic about their levels of disposable income. As a result, consumers continue to adopt tactical spending behaviours, trading down to cheaper alternatives or opting out of purchases all together.
“With the ‘Golden Quarter’ now in full swing, the question remains whether consumer spending will pick up to paint a more positive picture for Quarter Four.”
Ian Stewart, chief economist at Deloitte UK, said: “Higher inflation and economic uncertainty are weighing on consumer sentiment. An easing of inflation next year and further interest rate cuts offer the best prospects of reviving consumer spirits.”
