Inflation and Brexit hit shoppers' confidence

The research showed that consumer sentiment about personal finances, spending intentions and debt levels have all deteriorated over the last quarter.

Richard Lim, chief executive of Retail Economics, said: “There was a marked deterioration in consumers’ sentiment on their personal finances, levels of debt and spending intentions according to our latest research. Concerns over rising inflation, Brexit and repaying debts and loans were at the forefront of shoppers’ worries."

He said that over a quarter of consumers showed some concern over credit card debt, with 11 per cent suggesting that they are only "just about managing", and 5 per cent saying that they are "unable" to make minimum repayments on credit card bills.

“These pressures have shifted shopper behaviour with almost half suggesting that they had become more cautious with their overall spending in the last three months. Projecting forwards for the next three months, a further 21 per cent said they are actively planning to cut back on spending altogether," he added.

“With households facing a pincer movement of rising inflation and weaker wage growth, we’re increasingly concerned that they are going to find servicing debt levels extremely problematic. Any subsequent rise in interest rates will only agitate consumers and exacerbate this problem further.”

The research showed that 34 per cent of consumers expect their personal finances to weaken in the next three months, up from 27 per cent in April.

49 per cent of consumers said they had become more cautious in their spending habits over the last three months, up from 43 percent in April, and 21 per cent of consumers described their personal finances as “just about managing”.

29 per cent of consumers said their biggest concern at the moment is Brexit, down slightly on April’s figures. 19 per cent said rising inflation was their biggest concern, up from 11 per cent previously, and the third biggest worry was debt and loan repayment, which is a concern to 13 per cent of consumers.

47 per cent of consumers said they would cut back on eating out and takeaways if they felt their personal finances came under pressure and 21 per cent of consumers said they were planning to cut back on discretionary spending in the next three months.