British consumers are preparing to spend more in the run-up to Christmas despite growing pessimism about their personal finances according to the latest British Retail Consortium (BRC) Opinium Consumer Sentiment Monitor.
The survey, conducted between 7 and 10 October, found that expectations for personal spending on retail goods rose sharply to +14, up from +5 in September.
Overall spending sentiment also increased to +18 from +14 a month earlier, suggesting households are gearing up for the festive period.
However, the outlook for personal finances deteriorated, slipping to -11 in October from -7 in September – the weakest reading since May.
MARGINAL IMPROVEMENT
Confidence in the wider economy showed only a marginal improvement, rising to -35 from -36, while expectations for saving turned negative, falling to -9 from zero.
Helen Dickinson, Chief Executive of the British Retail Consortium, says: “With Christmas now around the corner, expectations of spending, particularly on retail goods, rose sharply, with a corresponding drop in expected savings.
“This effect was pronounced among Millennials and Gen X, the generations most likely to have children living at home.
“Worries about the cost of Christmas, coupled with concerns about potential tax rises in the upcoming Budget are likely to have contributed to the drop in sentiment around personal finances, which fell into double digits for the first time since May.”
FAMILIES ARE STRUGGLING
And she adds: “While the prospect of Christmas may have boosted expectations of grocery spending, the general rise in food prices has meant many families are struggling with the rising cost of living.
“Retailers are doing what they can to limit price rises, but high costs from the last Budget – including increased employment and packaging taxes – are still filtering through into inflation.
“The Budget is an important opportunity to relieve some of these cost pressures – particularly the disproportionate burden of business rates on the retail industry.”
The findings suggest retailers could see a modest pre-Christmas boost in sales volumes, but households are likely to remain cautious amid ongoing cost pressures and uncertainty over fiscal policy.
