UK: Consumer confidence returning on clothing spend
Fewer people are cutting back on clothing spend, despite overall UK consumer confidence dipping for the first time in 12 months, according to new figures.
Falling inflation has helped reduce downward pressure on discretionary spending, research by Deloitte has revealed. Sentiment in categories such as clothing dropped to 3% in the fourth quarter. This compares to a larger fall of 7% in the previous quarter.
The figures show that overall, consumer confidence has suffered a setback for the first time in 12 months as UK shoppers become savvier with their budgets.
Consumer confidence dipped 11% in the fourth quarter, compared to 8% in the previous quarter.
"In a sign of the headwinds facing the consumer sector, the number of pessimists continues to outnumber the optimists across all measures of confidence in our survey," said Ian Stewart, chief economist at Deloitte.
"Weak wage growth in particular is still putting pressure on household budgets. Recent gains in consumer spending have been largely fuelled by people dipping into their savings, higher levels of borrowing and lower inflation, rather than an increase in real disposable income."
The fall, however, is likely to be a temporary set-back, Deloitte says, as an improving economy is expected to help lift real incomes this year.
"We think this is a setback rather than a longer-term, underlying decline in confidence. Consumer sentiment is higher than it was a year ago and an accelerating economy and lower inflation should bolster consumer incomes in 2014."
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