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Consumer confidence hits three-year high

Consumer confidence has risen for the third quarter in succession according to the Deloitte Consumer Tracker, which surveys 3,000 adults on consumer spending attitudes and behaviour.

Consumer confidence nudged up to -5% from -6% in the second quarter of 2014. Confidence is now three points higher than a year ago and 13 points higher than when the survey began in the third quarter of 2011.

There were year-on-year increases across five of the six measures of confidence. Consumers’ confidence regarding their disposable income rose by seven points, while confidence in their levels of debt climbed by five points and confidence in job progression increased by six points from a year ago.

There was also a decline in the number of consumers reporting a reduction or loss of income.

The report found spending on essential items declined for the third successive quarter, allowing consumers to switch more of their spending to discretionary items such as holidays and eating out. This trend is set to continue into the Christmas season.

“Even without growth in real incomes, consumer confidence has continued to rise,” said Ian Stewart, chief economist at Deloitte.

“Lower oil prices and commodity prices and a strengthening pound have led to a sharp decline in inflation. An improving jobs market and lower inflation have been a real tonic for UK consumers.

“With inflation on a declining path and earnings heading up, the scene is set for a recovery in real incomes at the turn of the year.”

Ben Perkins, Deloitte’s head of consumer business research, added: “Looking ahead to 2015, consumers appear in positive mood as they expect the value of their properties to continue to rise and their levels of debt to fall. The decline in the amount spent on essentials like food and utility bills is also expected to continue.

“However, with the prospect of higher interest rates, along with a cooling housing market, there are still concerns on the horizon.”

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