Fears of rising interest rates and lack of pay rises has not stopped the UK’s consumers feeling the most positive in more than two years but the amount they have to spend on non-essentials is waning.
Consumer confidence has now spread out from the South-east into the north of the UK, according to the latest Deloitte Consumer Confidence Tracker.
But according to supermarket Asda’s latest income tracker, the average household had £171 a week in discretionary income in June 2014 – just £1 more than a year ago.
This comes as inflation spiked to 1.9 per cent in June, well ahead of the 0.7 per cent rise in average pay packets.
Deloitte said confidence is at its highest level since its Tracker began and said “confidence in the North has increased significantly this quarter, suggesting that a recovery is gathering pace across the country.”
More people have jobs, or have started new jobs, while low inflation has meant their money is going further. In the coming months consumers said they plan to splash out on eating out, short holiday breaks and big ticket electrical goods.
Ben Perkins, head of consumer business research, said: “Combined with the rising confidence in household disposable income, consumers are edging away from the defensive spending habits they adopted during the recessionary years and spending more on the things they enjoy.”
Asda’s chief executive Andy Clarke said the recovery remained a “postcode lot-tery” with families in the Midlands experiencing stronger growth in disposable incomes – what is left after paying essential bills like energy food and housing – than the rest of the country.
In the East and West Midlands, recovering manufacturing fortunes meant families were £7 and £6 better off respectively, although those in London were just £1 better off and Scotland families saw disposable incomes stagnate. The South-west were £1 worse off year on year
Mr Clarke said: “This month’s income tracker is a tale of two halves. Whilst we are seeing the ninth successive month of growth, this growth is slowing. And over the past month families have not felt the same level of benefit in their household budgets that the positive headlines about economic recovery that we’ve seen in recent weeks would suggest.
“Whilst some regions continue to step on in their economic recovery – such as London and the Midlands – others, such as the South-west have actually seen a step back this quarter, indicating that recovery still remains a postcode lottery.”
Deloitte also said that more than half of the working adults surveyed do not expect their salaries to increase and many plan to repay more debt and save in the coming quarter.Reuse content