Biggest decline in consumer confidence for two years
Consumer confidence has recorded the biggest decline in more than two years as households' concerns about disposable incomes and debt levels grow, according to an index.
Across the UK, consumer confidence fell by three percentage points in the second quarter of 2017, the biggest quarterly decline in more than two years, according to the Consumer Tracker report from Deloitte.
The quarterly survey of 3,000 people, carried out between June 16 and 18, saw overall consumer confidence fall to minus 10% in the second quarter of 2017, deteriorating from minus 7% the first quarter.
The overall decline was particularly driven by falls in confidence in disposable income and debt levels, reaching their lowest levels in over three years, Deloitte said.
Spending on essential items and discretionary spending fell compared with the previous quarter.
In further evidence that the experience economy is feeling the impact of the increased mood of consumer caution, the report said spending on extras such as eating out and the cinema fell back for the second quarter in a row - "in a sign that the recent upward trend in leisure spending has also been hit".
Ian Stewart, chief economist at Deloitte, said: "A squeeze in living standards has dented consumers' spirits. With inflation rising to 2.9% in June, its highest level in four years - and earnings growth around the 2.0% mark, consumer spending power is shrinking for the first time in three years."
He continued: "However, we shouldn't lose sight of the fact that some big things are going right for consumers.
"Unemployment is at a 40 year low, the employment rate has never been higher and interest rates - and debt funding costs - are at rock bottom levels.
"Consumers are feeling the pinch from higher inflation, but the Tracker shows that sentiment about job opportunities, career progression and job security are higher than they were a year ago."
Ben Perkins, head of consumer business research at Deloitte, said retailers are remaining competitive and are actively trying to help consumers through lower pricing, discounting and loyalty programmes.
He said: "Retailers will also know that it doesn't take much to give consumers a boost. Even a dry, hot summer may be a sufficient catalyst to lift consumer spirits in the short term."