The latest Deloitte Consumer Tracker shows that consumer confidence rose for the third quarter in succession in Q3 2014, reaching a three-year high and taking another step closer to positive territory.
Consumer demand remains robust
Demand remains robust, with consumer spending up by 2.1 per cent in the first quarter of 2014. Consumer spending on essential items continues to decline this quarter, allowing consumers to switch more of their spending to discretionary categories. This quarter net spending on holidays moved into positive territory for the first time since the survey began in Q3 2011.
Strong job market boosts confidence
Fewer consumers suffered a reduction or loss of income in Q3 2014 than a year earlier, continuing the downward trend. This is another sign of less pressure in the labour market.
Confidence rises in the absence of wage growth
An increase in unsecured lending has helped boost the consumer sector in the absence of real wage growth, but other factors such as declining inflation, lower oil prices and a generally strong pound have also helped mitigate the situation.
Consumers optimistic on prospects for 2015
Looking ahead to 2015, consumers are optimistic as they anticipate that their debt levels will fall while the value of their properties will rise. Fewer consumers expect to spend more on food or grocery prices to rise. However, two areas of concern remain: the prospect of higher interest rates as well as higher taxes.
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