By Daniel Hunter

Consumer confidence is growing and behaviour is beginning to change, according to the latest Deloitte Consumer Tracker. Consumers feel the most optimistic about their disposable income since the Tracker began in 2011.

The sentiment index rose by 7 points to -29%, compared to -36% this time last year. Confidence has been bolstered by an improving economic climate and a reduction in consumer concerns about debt which has nearly halved in the last year, from -15% in Q2 2012 to -8% in Q2 2013.

As a result, consumers are showing a slightly greater willingness to spend on non-essentials, such as leisure activities. While they are still being cautious towards spending, last quarter, fewer consumers were spending less on holidays, short breaks and eating out. Net spending on holidays rose by two points from -6% in Q2 2012 to -4% in Q2 2013. Net spending on short breaks and eating out rose by four points to -13%, compared to -17% this time last year.

Although consumer sentiment is becoming increasingly positive, these small steps show that spending remains hesitant for the time being. Indeed consumers have become used to weak income growth in the last five years and their spending is unlikely to return to pre-crisis rates of growth for a long time. Still, as confidence continues to grow, consumers are becoming less defensive and fewer say they intend to spend less on leisure in the next quarter.

“Though the consumer mood is cautious, their sentiment is gradually beginning to improve. The British public are making the most of the glorious weather with indications showing that UK holiday bookings are booming," Graham Pickett, head of travel, hospitality and leisure at Deloitte, said.

"The aviation sector is reporting an upturn in bookings too. However, the hot weather is slowing activity on outbound holidays as many of those who were planning on taking a summer break abroad are still making their late bookings, but opting for staycations rather than holidaying overseas.”

Jon Lake, a corporate finance director in the licensed retail group at Deloitte, added: “Consumers have been reluctant to cut back on eating out and the slow return of consumer confidence will be welcomed by the restaurant sector. Of particular interest is that while the consumer drive for value for money remains strong, those operators and brands who consistently deliver quality of product and service are being rewarded by a loyal consumer and better relative market performance.”

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