The Deloitte Consumer Confidence Tracker has revealed that consumer confidence fell in the South West by two percentage points in Q2 2022 to -20%.
It was slightly lower in Q2 2020 at -21% and the all-time low was in Q3 2011 when it reached -22%.
From the measures of consumer confidence, disposable income and job security declined the most quarter on quarter by -6 and -7 percentage points respectively in the South West.
In Q2 consumer spending in the South West increased in six out of ten of the essential categories. Discretionary spending decreased in six out of eight categories in the same period. In Q3 overall spending is expected to decline by -4 percentage points.
In the South West leisure spending in Q2 increased on holidays, going to the gym and playing sport. In Q3 leisure spending is likely to decline in all but one category – betting and gaming.
Phil Lane, Partner and Consumer Business Lead at Deloitte in the South West and Wales, said, “Consumers in the South West have been enjoying normal activities recently – festivals, sporting events and holidays. But the outlook for Q3 is not as positive with consumer spending in the South West decreasing across just about every category as people tighten their belts for more cost hikes in the autumn.
“We are seeing that consumers are shopping savvy as the rise in inflation hits more pockets. Cheaper brands, buying less or not spending on discretionary items are all on the cards as consumer confidence continues to fall.”
The South West findings are in keeping with the overall national picture – The Deloitte Consumer Tracker revealed UK consumer confidence fell by three percentage points in Q2 2022, reaching a historic low of -19% and below the previous record set during the lockdown of March 2020.
Sentiment around the state of the economy in Q2 fell to -83%, the lowest level since the start of the COVID-19 pandemic when the measure hit an all-time low of -88%. With further interest rate rises on the way, consumer sentiment around the economy could fall further. This would impact already declining sentiment in job opportunities, and job security; down quarter-on-quarter by two and four percentage points, respectively.
The second quarter of the year saw spending fall across almost every category of leisure, with eating out, drinking in pubs and bars, and in-home entertainment seeing the most dramatic quarter-on-quarter fall.
However, many consumers have made the most of this year’s additional bank holiday and continued to book both long and short breaks; in some cases, funded through the redemption of vouchers from COVID-cancelled trips.
The return of many summer events has also lifted spend in this category, albeit only by three percentage points compared to the same time last year, signalling that consumers are reining in on non-essentials.
Céline Fenech, Consumer Insight Lead at Deloitte, said, “Inflationary pressures and rising fuel and food bills are having a combined effect on consumer behaviours and, for many, cost is being prioritised over brand loyalty. With inflation expected to rise further this year, consumer businesses must ensure they are able to adopt ‘price elasticity’; stretching their product ranges across budget and premium to suit every consumer pocket.”
The Deloitte Consumer Tracker is based on a consumer survey carried out by independent market research agency, YouGov, on Deloitte’s behalf.
Pictured above: Phil Lane, Partner and Consumer Business Lead at Deloitte in the South West and Wales