| | Retail Week reports that GfK’s long-standing consumer confidence index stayed in positive territory throughout 2015, rising to a 15-year high during the summer when confidence was at +7.
Asda’s well-regarded income tracker, produced with the Centre for Business Research, told a similar story about discretionary income. Over the past 12 months the tracker has shown growth in the money left in people’s pockets after essential items such as fuel, food and mortgage were paid.
The latest report showed the average UK household had £193 a week discretionary income in October, up by £17 a week, or 9.6%, year on year.
There were lots of reasons for consumers to be happy in 2015.
Asda senior director of insight and pricing Liz Lamb says discretionary income has been rising because fuel, food and energy prices have fallen.
Fuel prices were down 14% compared with the previous year and Asda recently lowered its price for a litre of petrol to below £1 for the first time in six years.
The UK’s inflation rate, as measured by the Consumer Prices Index, was unchanged at -0.1% in October, according to the Office of National Statistics, and was only +0.1% in November.
The index was at close to zero throughout the year. Continued food and drink deflation helped consumers as they benefited from the fierce grocery price war. Food and drink prices fell 2.7% in November, according to the ONS.
By late 2015 home energy bills were 4.1% lower than in 2014, providing further respite for consumers.
Meanwhile, UK workers have received a pay rise. Average wages are increasing at the fastest pace for more than six years.
Average pay across the economy edged up 2.9% year on year in May to July, according to the ONS.
There is some debate about whether this increase in confidence and disposable income translates to more spending.
According to Asda, people are saving rather than spending - 80% of those surveyed by the grocer set aside the additional cash.
Despite the increase in discretionary income, customer confidence is still fragile
However, GfK’s Consumer Life research, carried out in June, showed that shoppers in high spirits were more likely to buy.
When asked about their confidence in buying personal electronics (mobile phones, tablets, electronic readers), 22% of people surveyed were "not confident at all" about making a purchase but 45% were "very confident". For home electronics (TVs, computers, home entertainment), again more were very confident (40%) compared with 21% of shoppers who were not confident at all. It was a similar story in home appliances - 19% were not confident while 33% were very confident.
GfK’s November index revealed that shoppers believed it was the right time to make a major purchase such as furniture or electrical goods. The indicator for major purchases was up 10 points year on year.
Consumer optimism came in at +2 in December, according to GfK’s index.
While the overall score meant 2015 was the first time the index had shown positive scores for an entire calendar year, December’s measurement of confidence in the economy over the next 12 months at -6 was down one point on last year.
While the only one of five indicators to be down year on year, it suggests confidence is still faltering.
The rapid surge in discretionary income has also given way to a more steady rise since October, according to Asda. |