Easter to mark ‘turning point’ for consumers
This Easter week is expected to mark a “turning point in consumer prospects”, economists said today, as they forecast increased spending equivalent to £400 per UK household.
Releasing its latest predictions, think-tank the Centre for Economics and Business Research (CEBR) said UK consumer spending was likely to be a substantial £11.4 billion over the full Easter week, equivalent to £400 per household, and a 5.7 per cent increase from last year’s total. It said that despite challenging economic conditions and rising prices, British consumers appeared confident about opening their wallets once again.
Economists at thecebr noted: “This weekend we have an early Easter. Traditionally the Easter weekend fires the starting gun for consumer activity in a range of areas, and we estimate that this will be especially so in 2024 for several reasons. Consumers are feeling confident. According to the Yougov/cebr Consumer confidence index, optimism is at its highest level for the past two years. This reflects a confluence of factors including a sharp slowdown in inflation, strong real wage growth, and recent policy changes such as the national insurance contribution rate cut.
“In addition, data from the Asda income tracker, developed by CEBR, now shows that family spending power has experienced annual growth for eleven consecutive months, reaching its highest level for almost two years. These factors suggest that Easter week could mark a turning point for UK consumer prospects.”
But it warned that, “true to British form”, weather conditions may dampen momentum. Dry weather typically facilitates shopping and spending, “encouraging even the most frugal individuals to loosen their purse strings,” CEBR noted.
“Unlike our consumer spending forecasts, the weather forecasts are downbeat,” it cautioned. “Such a mixed weather outlook could exert downward pressure on consumer spending during Easter week.”
The latest CEBR update noted that the Christmas period had proved “challenging” for UK retailers, with many consumers opting to tighten their belts amid continued cost-of-living pressures. It said the festive period was a good time to save when times are tight as it is “relatively easy to spend less on a Christmas present”. Consequently, monthly seasonally adjusted retail spending was down by 3.5 per cent on a month-on-month basis in December 2023.
“But items on retailers’ shelves after Christmas have to be shifted in the January sales,” CEBR added. “The need to clear post-christmas inventory prompted a significant discount-fuelled rebound in monthly seasonally adjusted retail sales in January, with a sharp 3.6 per cent increasethe largest month-on-month rise since April 2021.”