LONDON: Consumer confidence in the UK has risen to its highest level in over two years, according to the latest Deloitte Consumer Tracker, which also recorded a significant increase in spending on big-ticket items.
The professional services firm has been analysing consumer spending and attitudes on a quarterly basis since Q3 2011 and found current overall confidence to be 11 points higher (-7% in Q1 2014 vs. -18% in Q3 2011).
Coming just a week after official statistics confirmed a further rise in employment and wages rising in line with inflation for the first time in years, net spending on big-ticket items is 5% higher than in Q1 2013.
Spending on holidays and electrical goods rose by 4% and 5% respectively since the same period last year while consumer confidence about their levels of disposable income increased by 7% in the last quarter alone (-20% in Q1 2014 vs. -27% in Q4 2013), the fastest growth since the Tracker began.
British consumers are also less concerned about their personal circumstances because they expect lower taxes and the value of their homes to continue to rise.
Furthermore, fewer consumers expect food and utility prices to rise and Deloitte anticipated that shoppers would continue to increase their discretionary spending.
Ian Stewart, chief economist at Deloitte, said: "Following a succession of good news about the UK economy, the strong growth in overall confidence this quarter points to consumers being much more positive and suggests the recovery is gathering pace.
"Lower inflation, easier access to credit, historically low interest rates and an improving job market have all helped bolster consumers' spending power."
Ben Perkins, head of consumer business research at Deloitte, agreed there were now more sustainable conditions for "robust growth" in consumer spending over the next couple of years, but cautioned that a possible rise in interest rates remains a concern for consumers.
Data sourced from Deloitte; additional content by Warc staff