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Consumer confidence in the UK drops in the second half of 2021

Feb 11, 2022 United Kingdom
Consumer confidence in the UK drops in the second half of 2021
Despite a strong rebound in the first half, consumer confidence fell for the second consecutive quarter in the last three months of 2021, thanks to the rise in living costs and to the impact of the Omicron variant
According to the Deloitte Consumer Confidence Tracker, in the fourth quarter of 2021, consumer confidence declined one point percentage to -11, as compared to the previous one. Sentiments surrounding personal finances, as consumers face higher prices due to inflation and to the impact of the latest variant of the Sars-Cov-2 virus have played the main role in this outcome.

The report shows that 74% of the surveyed consumers have indicated to have spent more in the fourth quarter of 2021 thanks to higher prices. In the third quarter, the percentage recorded had been 59%. Household levels of disposable income dropped by five percentage points to -26 from -21 in the third quarter, and is now significantly lower than a year ago: it declined nine points, as compared to the fourth quarter of 2020. However, confidence regarding levels of debts remain unchanged (four points down, as compared to the last quarter of the prior year).
 
Sharply higher inflation and a squeeze on consumer spending power has hit consumer confidence. With inflation set to rise further a tough few months are in prospect”, pointed out commented Ian Stewart, Chief Economist at Deloitte, adding, however, that “high savings, strong consumer balance sheets and rising employment should help soften the blow to spending caused by higher inflation”.

Consumer confidence on the UK economy has also taken a major hit, as it fell 8 percentage points to -53, as compared to the prior quarter, the lowest reading since the first quarter of 2021, when the country was in strict lockdown. “Significant rises in household energy bills due in April, large national insurance and income tax rises combined with highest inflation rate in the three decades contributed to consumer sentiment around the state of the UK economy”, it can be read on the report.


Image Credits: retailgazette.co.uk

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