Consumer confidence fell for the second consecutive quarter in Q4 2021 despite a strong rebound in the first half of 2021, which led to confidence returning to its pre-COVID-19 level in June 2021. The Deloitte Consumer Confidence Index1 lost one percentage point quarter on quarter to -11% as the rising cost of living and the emergence of the Omicron variant impacted consumer sentiments on personal finances and health.
Deteriorating sentiment around personal finances and health drive a decline in overall confidence
The fall in the overall confidence index in Q4 2021 was driven not only by a deterioration in sentiment surrounding personal finances as consumers face higher prices due to inflation. It also reflected the impact of the latest variant of the COVID-19 virus on consumers’ confidence in their health and wellbeing, and in their children’s education and welfare.
Consumers’ confidence about their household levels of disposable income fell by five percentage points to -26% from -21% in Q3 2021 and is now significantly lower than a year ago, having lost nine percentage points compared to Q4 2020. Meanwhile, although sentiment about levels of debt was unchanged compared to the previous quarter and remained at -4% in Q4 2021, it is four percentage points down on the same period a year ago.
Confidence about health and wellbeing, and sentiment about children’s education and welfare remain correlated to the direction of the pandemic. With the emergence of the Omicron variant driving higher infection rates in December 2021, consumers’ optimism around health and wellbeing lost four percentage points to -26% compared with Q3 2021, while confidence about children’s education and welfare fell by five percentage points to -7% over the same period.
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