UK consumer confidence has improved with a two-percentage point increase in the first quarter of 2023, marking the second consecutive quarter of improving confidence after five quarters of decline, states a recent report.
According to the latest Deloitte Consumer Tracker, overall confidence was lifted by improved consumer sentiment towards job opportunities and progression (+3.6 percentage points) and general health and wellbeing (+4.4 percentage points), against the backdrop of a strong labour market and the winter months coming to an end.
Despite falling energy prices, with food inflation continuing to rise, spending on essentials rose for a third consecutive quarter, up 1.7 percentage points from Q4 2022. Meanwhile, in a sign that many households remain cautious when spending on non-essentials, spending on discretionary items fell by one percentage point from the previous quarter.
Although fewer are doing so, consumers have continued to adopt more recessionary behaviours, states the report, showing that a third (34 per cent) of respondents said they have switched, or are intending to switch, to cheaper products such as value or own-brand ranges in order to cope with the increased cost of living. In addition, a growing proportion of consumers said they have, or plan to, take advantage of sales and discounts (33 per cent, up from 30 per cent last quarter) and shop at cheaper stores (30 per cent, up from 28 per cent last quarter).
However, in a sign that consumers remain vulnerable to ongoing economic headwinds, overall confidence remains down year-on-year. Persistent inflation continues to depress consumers’ sentiment about their levels of disposable income which, despite improving from Q4 2022, remains lower than when the Deloitte Consumer Tracker survey first launched back in 2011.
The Deloitte Consumer Tracker is based on responses from 3,212 UK consumers aged 18+ surveyed between 17 and 20 March 2023, after the Chancellor’s Budget announcement.
Céline Fenech, consumer insight lead at Deloitte, commented: “Many consumers continue to adopt different shopping tactics to combat high prices.
“With food inflation persisting, we see many households sacrificing non-essential items in order to afford everyday goods that are most vulnerable to price hikes. Where they must spend, consumers continue to take advantage of sales and discounts, while cheaper stores and own-brand ranges also remain important for the price-sensitive shoppers looking to get the most value for their money.”
