Consumers continue to remain cautious, following ongoing concerns over the health of the health of the economy, according to Deloitte.
In the North East many consumers are still wary of making larger purchases, holding back from holidays, going out and white goods. Despite this however, pressure to increase spending on food has eased, and the proportion of consumers who expect to spend less on groceries has fallen to 23%. The same trend can be seen in utility bills and housing, at 19% and 11% respectively.
Paul Feechan, office senior partner at Deloitte in the North East said: “The latest consumer tracker shows North East shoppers remain concerned about job security and as a result are cautious about spending on big ticket items. The environment remains challenging but successful retailers have cut costs and restructured their businesses but will need to keep costs tightly under control.
“There are positive signs in the consumer tracker, and although inflation has run ahead of growth of consumer earnings, the sharp fall in inflation in the recent months indicates this trend could soon reverse, and will, in the process, give a boost to consumer spending power.”
There are now sights that the squeeze on Uk consumers is easing, following a fall in inflation to 2.4% in June, the lowest level in two years. This is positive news for consumers, who are finally seeing a real income rise, and some optimism about spending on discretionary items.
Ian Stewart, chief economist at Deloitte, explains: “Lower inflation enables consumers to shift spending away from the essentials such as food and utilities towards more discretionary areas, including eating out, clothing and footwear, where spending has been under real pressure in recent years.”
Trading down, planning their spending and keeping impulse purchases in check continue to be the preferred methods for those consumers who reported spending less this quarter to manage their outgoings. These same consumers are increasingly bargain hunting and taking advantage of sales and special offers in order to make savings.