UK: The Deloitte Consumer Tracker - Caution Remains Despite Rising Incomes

Last Updated: 4 February 2013
Article by Deloitte Consumer Business Group

Most Read Contributor in UK, August 2017

Key findings:

  • UK households income improved in the fourth quarter of 2012.
  • Consumer sentiment is weak, despite consensus forecasts pointing to slower inflation.
  • Spending holds up in the fourth quarter but consumers remain cautious.
  • Economic growth is likely to be weak in 2013.
  • Consumers are concerned about rising prices and plan to continue saving and rebuilding their finances.

Despite some improvement in their financial circumstances, consumers remain cautious and continue to focus on cutting debt.

Consumer and market inflation expectations are out of line as we enter 2013. While consensus forecasts point to further slowing of inflation in the coming year, consumers remain concerned about rising prices and continue to rebuild their finances.

In the year to the fourth quarter of 2012 inflation slowed dramatically, but consumer inflation expectations remain unchanged. Many people have become accustomed to higher levels of inflation and expect prices to continue rising in 2013, particularly for food, drink and utilities.

Inflation expectations are undermining confidence and dampening willingness to spend.

Consumers expect more bad economic news in 2013, perhaps reflecting the high number of negative headlines in the recent period.

HOUSEHOLD DISPOSABLE INCOME

UK household income improves in the fourth quarter of 2012.

  • Some 13 per cent of UK households received a pay rise or bonus in the fourth quarter of 2012, a significant increase on the third quarter.
  • Thirteen per cent of households saw a reduction in income, compared with 15 per cent in the first quarter of 2012.
  • Other UK household circumstances influencing disposable income, such as employment, remained stable in the fourth quarter.

  • Average earnings growth remain below inflation, but the gap is expected to close.

CONSUMER CONFIDENCE

Consumer sentiment remains weak, despite forecasts of further declines in the rate of inflation in 2013.

  • Despite an improvement in household personal circumstances influencing spending, consumer sentiment in respect of disposable income remains flat.
  • Overall, sentiment suffered a setback in the fourth quarter, with five of six measures deteriorating.

  • Analysts say weak consumer confidence has become the new normal, with consumers highly cautious since 2009.
  • The Deloitte Consumer Tracker is in line with the GfK NOP index, which fell to ‑29 in December from ‑22 in November, an 18‑month high.
  • The UK population's sentiment about the economy over the next 12 months deteriorated to a level last seen in June, when the economy was in recession.

  • UK inflation remained at 2.7 per cent for the third month in a row in December, with rising gas and electricity bills the main sources of price pressure.
  • A rise in the price of food and drink contributed to inflation remaining above the 2 per cent target.

ECONOMIC OUTLOOK

UK growth is expected to remain weak in 2013.

  • Economists have downgraded the UK's growth forecasts for 2012 and 2013.
  • The UK economy is expected to have shrunk in 2012 and growth is expected to remain weak in 2013.
  • The euro crisis seems to be on hold, with Spain, Greece and Portugal implementing austerity measures to tame deficits.

  • The sharp fall in consumer price inflation and a revival in private‑sector job creation propped up UK consumer spending in 2012.
  • Moreover UK unemployment rate fell to 7.7 per cent in the three months to November, down from 7.8 per cent in the previous quarter.

SPENDING BEHAVIOUR IN THE LAST QUARTER

Despite weak consumer sentiment, spending held up in the fourth quarter of 2012.

  • Continued slowing of inflation and encouraging growth in earnings have led to an easing of pressures and spending is continuing to increase in discretionary categories.
  • The data, however, also shows a net increase in spending on groceries (from 23 per cent to 32 per cent) and utilities (28 per cent to 44 per cent).
  • There is still some doubt as to whether the positive signs seen over the past year represent the start of a sustained consumer recovery.

  • In the year to the fourth quarter of 2012 inflation has slowed dramatically, but consumer expectations for inflation remain unchanged.

  • Consumers are becoming more discerning, and defensive spending strategies saw a slight increase in the fourth quarter.

  • Expansionary spending behaviours suffered a slight setback in the fourth quarter, except in the gift category, suggesting Christmas was reasonably positive for some retailers.

  • Our data shows an encouraging increase in the number of people making repayments on their credit card accounts, but a slight decline in the number repaying loans.

  • Despite a negative net balance in the total number of people saving, the number has nearly halved as consumers have been consistently increasing their savings.
  • The fourth quarter of 2012 encouragingly sees a sharp increase in the number of people repaying their debts.

  • In the past five years, consumers have focused on consolidating their debts. Continuing that trend, the personal saving ratio increased to 7.7 per cent in the third quarter of 2012, from 6.6 per cent in same period in 2011.

CONSUMER SPENDING OUTLOOK

Consumers remain concerned about rising prices and plan to continue saving and rebuilding their finances.

  • Consumers seem to have become accustomed to high levels of inflation and expect prices to continue to rise in 2013, particularly utility prices.

  • Consumers intend to continue to cut the number of credit cards and loans they hold in the next three months, confirming a consistent trend over the past year.

  • More consumers expect to buy an expensive electrical item, a sign that discretionary spending could be picking up.

  • One of the official measures of major purchases decreased one point in December 2012 to ‑27, but remains four points higher than in the same month the previous year.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.