Consumer sentiment regarding the future prospects of the UK increased in December, the second consecutive month of improvements. However, sentiment remains below pre-referendum levels, particularly surrounding views on the UK economy and retail spending. The main cause for the fall in planned retail spending comes from more consumers planning to save over the next six months. The essential nature of food and grocery will ensure that this sector is impacted the least, while sectors such as entertainment and homewares will be most affected.
Shoppers expect price rises
In December, the majority of consumers said they expected prices to rise over the next six months with food, fuel and clothing likely to see the greatest increases. During December, consumers benefited from heavy discounting from retailers before Christmas and after the festive period. However, we predict that more consumers will expect prices to rise as the year progresses as import cost increases are realised, forcing retailers to pass at least some of these costs on to shoppers.
Zoe Mills, Retail Analyst for GlobalData, comments: “Consumer sentiment has been lifted by the festive period, however, this positive attitude by consumers is unlikely to last long as consumers plan to save rather than spend in stores. The first half of the year is likely to be particularly hard for retailers, with almost half of consumers surveyed planning to spend less on retail over the next six months, compared to just over a third of consumers planning to spend less this time last year.”