By Daniel Hunter

UK consumer sentiment about disposable income is at its highest for two years, according to the latest Deloitte Consumer Tracker.

However, whilst consumers are at their most optimistic about the level of cash they have available since the Tracker began in 2011, discretionary spending remains subdued. Many consumers remain cautious about spending their cash on going out, booking short hotel breaks and holidays.

A third of consumers (34%) say they spent less on going out to the cinema, theatre and concerts during the first three months of 2013. This is a slight increase compared to the previous quarter (31%), which includes the festive period, but an improvement compared to the same time last year (37%). Just 11% spent more, showing no change compared to a year ago.

Similarly, 31% of consumers spent less on eating out and short hotel breaks, while 15% spent more.Again, these figures are comparable with Q1 2012. However, in all instances there are a smaller proportion of consumers who spent less year-on-year.

Of the 34% who spent less on going out, 57% said they couldn’t afford to go out (vs 62% in Q1 2012). 34% said they were going out less (vs 28% in Q1 2012) and spending more time at home instead, whilst 27% said they have consciously decided to cut down on going out (vs 29% in Q1 2012).

Conversely, of those who spent more on going out between January and March, 42% cited the increased cost of going out, 34% that they are going out more than the previous quarter and 23% that their ‘going out’ habits changing as the main reasons.

“The big picture is of an economy that has grown by just 0.4% in the last 18 months. The consumer economy is likely to remain relatively subdued for most of 2013. However, there is a definite upward trend in sentiment, and the consensus view is that the recovery will gain traction as the year progresses," Ben Perkins, head of consumer business research at Deloitte, said.

“In a low or no growth market, the winners will be those with a clear value proposition, who make it easy for consumers to understand the value they are getting.”

When it came to booking holidays in the first quarter of 2013, 21% of consumers spent less and 13% more. This is identical to the previous quarter and a 3% improvement on the same time last year when 24% said they had spent less.

“This year is expected to be the most traditional for a while for the travel sector. Consumers had their Christmas lunch then started looking online and at travel brochures and planning their holidays," Graham Pickett, head of travel, hospitality and leisure at Deloitte, said.

"Indeed, the sector has reported a rise in bookings in the outbound travel market during January and February, a likely result of the prolonged cold spell.

“Generally, consumers are reducing the number and length of the holidays they plan to take. But, if they are in employment, they are taking that break. Their concerns around currency worries are influencing the type of holiday they’re purchasing with travel operators reporting a rise in the take up of fixed price all inclusive packages.”

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