Consumer confidence plunges to historic low, shoppers cut fashion spend
If confirmation were needed, UK consumer confidence has hit a historic low. The country’s mood fell for a fifth consecutive quarter in Q3, dipping one percentage point to -20%, according to Deloitte’s latest Consumer Tracker. That’s its lowest level of confidence since the tracker began in Q3 2011.
On Friday, Gfk’s consumer confidence reading for October was still languishing near September’s all-time low, measuring a reading of -47.
Deloitte said Monday that as the cost-of-living crisis rages on, spending power unsurprisingly remains “significantly strained”, as consumer sentiment around levels of debt also reached the lowest on record, at -17%, two percentage points below Q2.
Both essential and non-essential spend declined for a second consecutive quarter in Q3, falling by two and one percentage points respectively, “indicating that consumers are cutting back across all areas”.
Some 30% of the 3,226 UK consumers interviewed last month said they are now spending less, up from 21% at the start of the year. Of these, 58% said they are cutting their spend specifically to save money.
Consumers highlight several actions they are taking to combat rising costs with 40% saying they are cutting purchases of clothes and shoes.
Meanwhile, growing interest in the secondhand market saw one in five consumers selling items on resale platforms in Q3. Some 16% of consumers bought more secondhand or refurbished items in Q3, more than twice the 7% that did so in Q3 2020.
Consumer sentiment towards the state of the UK economy remains low, at -80%, and at similar levels last seen in Q1 2020 at the start of the UK’s Covid-19 outbreak. Coupled with declining sentiment around job opportunities and career progression, down two percentage points, and sentiment on job security remaining flat quarter-on-quarter, consumers are reflecting concerns around job prospects by adopting more recessionary spending behaviours.
Ian Stewart, chief economist at Deloitte, said: “High inflation has driven consumer sentiment sharply lower this year despite a red-hot labour market. Now consumers are starting to worry about the outlook for jobs. With inflation elevated, interest rates on the rise and the labour market starting to cool the squeeze on spending is likely to intensify.”
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