More than a quarter of households across Bristol and the West have suffered a fall in their income over the past three months, forcing them to cut back on unnecessary spending, new research shows.
At the same time many people in work and earning the same are worried about the future as rising unemployment and price rises add to the gloom.
The research, by accountants Deloitte, shows 56% of households are pessimistic about their disposable income, 33% feel negative about their personal debt and 32% are concerned about job security.
As a result many are making significant cutbacks in their discretionary spending, according to Deloitte’s new Consumer Tracker which monitors consumer confidence and spending habits.
Some 40% are spending less on entertainment (cinema, theatre, concerts), while 31% are spending less on clothing and footwear and 30% are cutting back on holidays.
In contrast, inflation is driving up the cost of essentials with half of all respondents spending more on utility bills and food, and 36% spending more on transport.
However, by analysing Google search trends the survey shows reductions in total expenditure in categories such as clothing is because consumers are buying cheaper, rather than fewer, items.
Deloitte’s practice senior partner in the region, Denis Woulfe, said: “Discretionary spending has been hit hard in the past three months. Consumers are adapting their behaviour to the current economic environment by trading down, staying in and postponing the purchase of big-ticket items.
“However, while this is negative overall, it still presents opportunities to certain companies such as those providing subscription television, DVD rentals or takeaway food. Consumers are telling us they are deliberately making fewer impulse or spontaneous purchases. People are being forced to prioritise their spending habits.”
Deloitte chief economist Ian Stewart added: “A fierce squeeze on disposable income and high levels of macroeconomic volatility pushed the consumer sector back into recession in 2011.
“The UK has generated far higher levels of inflation over the last year than any other industrialised nation and this has hit consumer spending power. Inflation should fall sharply in 2012, bringing some relief to hard pressed consumers.
“But with unemployment heading up, credit in short supply and the economy in a fragile state we would expect household spending to increase only modestly in 2012.”
