Consumer spending confidence has hit its highest level on record despite people being more concerned about the economy than terrorism, according to Nielsen.
While economic fears catapulted the issue above both the terror threat and immigration as issues, the latest Nielsen Global Survey of Consumer Confidence and Spending Intention showed little impact on spending.
Across Britain, all consumer sentiments relating to personal finances, spending intentions and cutting costs were more positive at the end of 2016 than the beginning, except job prospects. The proportion of Britons positive about making purchases was 53% at the end of 2016, the highest ever recorded by Nielsen.
“As the political and economic planning for Brexit gets underway, concerns about jobs leaving the UK have unsettled consumers, as did the US election,” said Steve Smith, managing director, Nielsen UK and Ireland. “However, times generally remain good for British consumers, with strong employment and wage growth that rose slightly ahead of price inflation during the last year. In addition, disposable income remains stable, while tax benefits for the lower paid and a rise in the minimum wage have reduced income inequality. As a result, consumer spend continued to be the engine of UK GDP growth in 2016.”
The proportion of Britons who’ve switched to cheaper grocery brands to save money - an activity often regarded as a barometer of consumer sentiment and behaviour - finished 2016 at its second-lowest level on record (22%).
However, Smith said he was doubtful the trend would continue, “In the last quarter, we’ve seen the first signs of rising inflation in the UK. Rising petrol prices being a primary example, seeing the third-biggest jump in consumer concern. We now expect to see the start of price increases for consumer staples early this year and maybe cases of ‘shrinkflation’ as the industry looks to minimise the price increases being passed on to shoppers.”