As consumer confidence reaches an 18-month high, 20% of shoppers plan to splash out this Christmas.

Retailers set for a merry Christmas

As consumer confidence reaches an 18-month high, 20% of shoppers plan to splash out this Christmas.

Retailers set for a merry Christmas

Consumer research company Mintel forecasts a 2% growth in retail sales in December, compared with last year, driven by a recovery in consumer confidence, continuing low interest rates and a small boom in sales before VAT goes back up on January 1.

Recent research revealed that although consumers will continue to be a little cautious this Christmas, 20% revealed that they plan to splash out – a figure unchanged from 2008, and therefore apparently unaffected by the economic crisis. The number of people planning to spend a lot less on gifts this year has fallen 3% year on year.

However, Mintel believes the VAT change in January will impact on consumer behaviour and predicts a rush of buying in the week after Christmas as shoppers try to beat the VAT hike.

Mintel director of retail Richard Perks commented: “Consumer confidence has been steadily improving in recent months and the proportion of people feeling relaxed about their financial situation has been increasing even though they know there are problems ahead. There’s no doubt that consumer demand has held up far better than anyone expected a year ago and that is entirely down to the cuts in interest rates. Knowing there are tough times to come, consumers will decide to have a ‘good Christmas’ while they can still afford it.”

Nielsen’s Consumer Confidence Index, released today, reported that consumer confidence has risen to its highest level in 18 months. Although the figure is still relatively weak when compared with the results two and three years ago, the change still reflects that people are starting to feel slightly more positive about job prospects and their own finances.

Twenty per cent of people now believe job prospects in Great Britain will be good or excellent over the next 12 months, compared with 14% in June and 11% in April. 24% believe they will be bad compared with 26% in June and 42% in April.

British Retail Consortium director general Stephen Robertson said of the results: “These figures suggest it will be a long, slow climb out of recession for many customers but some do now have their feet on the first rung of the ladder. There’s no question the general mood of customers is better than a year ago, when conditions were dire, but improvement has been slow so far.”

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