Consumer confidence drops further as cost of living concerns intensify due to skyrocketing bills
Consumer confidence dropped further in the fourth quarter of last year as Brits concerns about the cost of living intensified.
Skyrocketing bills resulted in UK consumer confidence falling one percentage point at the end of last year, to minus 11 per cent, according to the latest Deloitte Consumer Tracker.
Cost increases for utilities and groceries saw 41 per cent of consumers’ personal expenditure increase, up from 36 per cent in the previous quarter.
Household disposable income sentiment fell five percentage points, to minus 26 per cent; nine percentage points lower than the fourth quarter of 2020.
Consumers have suggested they will delay holidays and socialising occasions, despite pent-up demand with Covid restrictions easing.
Those surveyed by Deloitte signalled their intended spending on discretionary items would fall by nine percentage points in the first quarter of 2022.
Consumers were readying to hold back with social spending especially, with going out and eating at restaurants, down -20 and -17 percentage points respectively.
Overall consumer spending on essential goods and services will remain flat in the first quarter of 2022, utility bill expenditure specifically is expected to increase.
The data comes as average household energy bills were upped by £693 to an eye-watering £1,971 per year, after regulator Ofgem updated its consumer price cap last week.
Céline Fenech, consumer insights lead at Deloitte, said: “With the expected squeeze on spending power and higher inflation, another fall in confidence may dent the hopes of a consumer recovery. However, some consumers are still in the fortunate position of having higher levels of savings compared to before the pandemic, indicating some financial resilience.
“The further easing of restrictions should also support an improvement in sentiment, in turn boosting spending. However, this may not occur until inflation has peaked so the critical question in the meantime is whether consumers can afford to continue spending.”