UK consumer confidence rallied in the third quarter of 2017, increasing by three percentage points from Q2 2017 after three consecutive quarters of decline, according to the latest Consumer Tracker report from Deloitte.
The quarterly survey of 3,000 UK consumers saw overall confidence rise to -7% in Q3 2017, up from -10% the previous quarter -the first time consumer confidence has seen a quarterly rise since Q3 2016.
Job security rose two percentage points (pp) and job prospects and career progression were up 5pp.
Despite the rise in optimism, rising inflation is still taking its toll on consumer budgets, with household disposable income a key area of worry, and net confidence falling by 9pp year-on-year, to -21%.
The Tracker also found that consumers are increasingly pessimistic about their levels of debt, with net confidence in this category falling by 4pp points in the last 12 months.
As a result of debt pressures, spending on discretionary categories has fallen by 2pp since Q3 2016. This fall has been driven by significant year-on-year declines for a number of discretionary sub-sectors, including going out, restaurants and hotels, which were all down 4pp.
Ian Stewart, chief economist at Deloitte, said: “The rebound in consumer confidence testifies to the resilience of the UK consumer in the face of surging inflation, Brexit uncertainties and the prospect of a higher interest rate. The bouncing consumer sentiment mirrors a similar recovery in business confidence since June’s election.
“However, it remains to be seen whether or not this uptick in confidence represents the start of an upward trend. Consumers face growing headwinds with disposable income shrinking, the potential of a first interest rate rise in more than ten years and banks tightening up on consumer lending.”
