Consumer confidence is at its highest level in three years, according to the latest Deliotte Consumer Tracker.
The study also showed that overall confidence is three percentage points higher than a year ago and 13 points higher than when the Tracker began in Q3 2011.
The Tracker shows confidence in household disposable income improved by seven points year-on-year (from -25% in Q3 2013 to -18% in Q3 2014). A strong job market has also boosted confidence, with fewer consumers suffering a reduction or loss of income in Q3 2014 compared to last year (down from 12% in Q3 2013 to 11% in Q3 2014).
Spending on essential items declined for the third successive quarter, allowing consumers to switch more of their spending to discretionary items.
Significantly, net spending on holidays moved into positive territory for the first time since the Consumer Tracker began (from -4% in Q3 2013 to 4% in Q3 2014). Additionally, net spending on short breaks and eating out rose 10 points from -13% (Q3 2013) to -3% (Q3 2014).
Looking forward to the next three months, consumers plan to spend more on holidays with the net spending expected to rise to -8% from -13% for the same period last year. Consumers also anticipate their net spending on short breaks and eating out to rise over the next quarter to -11%, up from -15% compared to same time last year.
Graham Pickett, head of travel, hospitality and leisure at Deloitte, said: “Even without growth in real incomes, consumer confidence has continued to rise. 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 also been a real tonic for UK consumers.
“Consumers have found more in their pockets to spend on non-essentials like holidays, short breaks and eating out.”