Consumer confidence fell by one per centage point at the start of the year, with concerns over inflation among the contributory factors.
According to the latest Consumer Tracker report from accountancy giant Deloitte, overall consumer confidence fall to -7 per cent in the first quarter of 2017, down one percentage point from the previous quarter.
Despite the quarterly fall in overall confidence, it remains broadly in line with the three-year average.
Significantly, four out of the six measures which make up the confidence index have seen negative movements in Q1 2017, with inflation rising and discretionary spending falling. In particular, consumer confidence in disposable income fell by three percentage points to -17 per cent this quarter, its lowest level in more than two years.
Ian Stewart, chief economist at Deloitte, said: “Since last summer’s EU referendum consumer spending has held up well, but with inflation rising and nominal wage growth starting to slow, consumers are beginning to feel a squeeze on their disposable income.
“In March, the rate of inflation stood at 2.3 per cent, above the Bank of England’s 2 per cent target and the highest in more than two years. There are already some signs that these pressures are contributing to a slowdown in consumer activity.”
Andy Coticelli, partner and consumer business lead at Deloitte in Yorkshire commented: “With less disposable income consumers will have to consider whether to trade down, buy less or borrow more.
“Consumers are already showing signs of moving away from making major purchases, and this is a trend that is likely to continue.”