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UK consumer confidence rose over the past three months to a three-year high resulting in a net increase of household spending on holidays, according to the latest Deloitte Consumer Tracker.
Net spending on holidays rose 4%, meaning those spending more outnumbered those who cut back for the first time since the Tracker began in 2011, with holidays the one area of discretionary spending to enter positive territory.
Spending on short breaks and eating out also rose, by 10 percentage points on a year earlier, although those spending less year on year still outnumbered those spending more by 3%.
Overall consumer confidence improved one percentage point to -5%, with improvements year on year in five of the six measures of confidence.
The Deloitte Consumer Tracker is based on a quarterly survey of 3,000 UK adults.
Consumers’ confidence regarding their level of disposable income rose by seven percentage points to -18% despite most households seeing little improvement in earnings.
Spending on essential items declined for a third successive quarter, allowing people to switch more of their spending to discretionary items.
Consumers also reported being likely to spend more on holidays in the final quarter of the year than last year, with net spending forecast to improve to -8% from -13%.
The Tracker forecast net spending on short breaks and eating out would also improve over the next quarter from -15% a year ago to -11%.
Deloitte head of travel, hospitality and leisure Graham Pickett said: “Even without growth in real incomes, consumer confidence has continued to rise.
“Lower oil prices and commodity prices and a strengthening pound have led to a sharp decline in inflation. An improving jobs market and lower inflation have also been a real tonic.
“Consumers have found more in their pockets to spend on non-essentials like holidays, short breaks and eating out.
“They made the most of picking up late summer holiday bargains and were helped by the good weather extending into September.
“With inflation on a declining path and earnings heading up, the scene is set for a recovery in real incomes around the turn of the year.
However, Pickett added: “all is not rosy in the aviation and travel industry. There is still a correction needed between the demand levels being seen versus the capacity that has been brought into the market over the last six months.
“Yields will be a challenge especially if a threatened interest rate rise comes through to test consumer confidence.”