Consumer confidence has fallen to a record low as households cut back on leisure spending to save money amid soaring inflation.
Confidence fell for a fifth consecutive quarter to its lowest level since 2011, when Deloitte began its consumer tracker. Sentiment among consumers fell to minus 20 per cent on the index, compared with minus 9.7 per cent in the same quarter last year, as households reduced spending on essential and non-essential goods. Further decline is expected over the Christmas period, usually a strong period of retail sales.
The index found that 30 per cent of consumers are spending less, up from 21 per cent in the previous quarter. Of those, 58 per cent said that they were doing so to save money. The poll, taken on September 17 and 18, shows that confidence had hit a record low even before Kwasi Kwarteng’s catastrophic mini-budget on September 23.
Inflation reached a 40-year high of 10.1 per cent in September, as the soaring cost of energy pushed up the price of goods across the board. It is expected to have risen further this month, after energy bills rose by 27 per cent. The cost of borrowing has also risen as the Bank of England battles inflation, pushing up mortgage repayments. Interest rates have risen from 0.1 per cent last December to 2.25 per cent and another rate rise is expected next month.
More than half, 57 per cent, of consumers are reducing their use of energy at home; 40 per cent are spending less on clothes and shoes; and 39 per cent are cutting down on going out and on leisure activities. Net spending on leisure fell two percentage points in the quarter to minus 12 per cent as consumers limited their visits to restaurants, cafés, pubs, bars and entertainment venues. Twenty-two per cent of respondents said that they had ended, or planned to end, an entertainment subscription such as Netflix or Disney+.
Simon Oaten, partner for leisure at Deloitte, said: “The hospitality industry has been one of the hardest hit in recent years. A reduction in typical festivities or diversion of these to [the] home will almost certainly take the shine off the ‘golden quarter’.”
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Consumers rein in spending as confidence falls to a record low