Easter weekend typically stands out as a highlight for retailers, as shoppers are enticed to venture out and make the most of the long bank holiday weekend. Despite challenging economic conditions amid the cost-of-living crisis, British consumers appear confident about opening their wallets once again as Easter week ushers in a resurgence in spending.
Cebr anticipates total UK consumer spending to be a substantial £11.4 billion over the Easter week, equivalent to £400 per household, a 5.7% increase from last year’s figures.
The recent Christmas period proved challenging for retailers, with many individuals opting to tighten their belts amidst the cost-of-living squeeze. Christmas is a good time to save when times are tight – it is relatively easy to spend less on a Christmas present. Consequently, monthly seasonally adjusted retail spending was down by 3.5% on a month-on-month basis in December 2023 [1].
But items on retailers’ shelves after Christmas have to be shifted in the January sales. 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% increase – the largest month-on-month rise since April 2021.
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 [2]. 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 (NIC) rate cut, offsetting the fiscal drag from non-indexed allowances.
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 [3]. Anticipated policy changes such as increases to pension payments, social securities, and the rise in National Living Wage, coupled with the decline in the Ofgem price cap, are expected to further bolster household spending power in the coming months. These factors suggest that Easter week could mark a turning point for UK consumer prospects.
However, not all indicators point towards an Easter week spending spree. 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. The early occurrence of this year’s Easter weekend does not bode well in this regard. Unlike our consumer spending forecasts, the weather forecasts are downbeat. Indeed, many areas are set to experience unsettled weather with rain or showers as a low pressure system heads for the mainland [4]. Such a mixed weather outlook could exert downward pressure on consumer spending during Easter week.
Weather conditions may also impact the housing market. Easter weekend is an important milestone for the housing market as the four-day break encourages people to head out and view houses rather than staying indoors. This year, the forecasted rain might dampen such activity.
Nevertheless, inclement weather may not entirely deter individuals from venturing out to view properties. Despite a challenging year, housing market activity has rebounded in early 2024, with four consecutive months of increasing mortgage approvals and two consecutive months of net positive RICS buyer enquiries [5,6]. While these metrics remain below pre-pandemic levels, they signal a resurgence in housing market interest, potentially indicating that Easter will represent a turning point for housing activity as well as consumer spending.
It is worth noting that even those who are discouraged from moving home may contribute to spending this weekend with home improvements the classic alternative to home moves, contributing to DIY consumer spending during Easter week.
With consumers increasingly confident and of the temptation of home improvements, we think the Easter weekend could signal the beginning of a bounce back in consumer prospects. An optimistic economic outlook should trump even a pessimistic weather forecast this Easter weekend.
[2] YouGov/Cebr Consumer Confidence Index
[3] Asda Income Tracker, February 2024
[5] Bank of England – Money and Credit bulletin
[6] RICS – UK Residential Market Survey
For more information contact:
Cameron Misson, Economist
Email: cmisson@cebr.com Phone: 020 7324 2873
Cebr is an independent London-based economic consultancy specialising in economic impact assessment, macroeconomic forecasting and thought leadership. For more information on this report, or if you are interested in commissioning research with Cebr, please contact us using our enquiries page.