Pressure on leisure spending falls despite consumer confidence setback

Consumer confidence suffered a setback in the fourth quarter of 2014, but pressure on leisure spending continued to ease.

That was the finding from the latest Deloitte Consumer Tracker, which found that the net balance of consumer sentiment fell slightly deeper into negative territory, to -11%, as opposed to -8% in Q3 2013.

However, falling inflation has helped reduce downward pressure on discretionary spending despite no real income increase. Net spending on holidays year-on-year has stabilised at -8%, improving from -9% in Q4 2012. Similarly, net spending on short breaks and eating out rose two points from -11% (Q4 2012) to -9% (Q4 2013).

Consumer confidence is expected to resume its climb in 2014 as lower inflation and an improving labour market combine to help lift real incomes and provide the conditions for sustained growth in the consumer market. During the first quarter of 2014, consumers plan to spend more on holidays with the net spending expected to rise to -4% (from -8% in Q1 2013). Similarly, consumers anticipate their net spending on short breaks and eating out to rise from -22% from -19%.

Graham Pickett, head of travel, hospitality and leisure at Deloitte, said: "We think the dip in consumer confidence is a setback rather than a longer-term, underlying decline. Consumer sentiment is higher than it was a year ago and an accelerating economy and lower inflation should bolster consumer incomes in 2014.

"Consumers are being selective, trading down in some categories, in order to be able to trade up in others, such as their holidays and eating out. Despite the emergence of signs of a recovery in the consumer economy, the job of selling to them will continue to be challenging as the ‘considered' buying behaviours developed during the recession are here to stay."