Improving employment figures are starting to register in shopping trends, with more spontaneous purchases and consumers in a positive frame of mind.
Research by accountancy firm Deloitte shows discretionary spending is at a three-year high, with more people registering pay rises and fewer suffering loss or reduction of income.
Ben Perkins, head of consumer business research, said: “Lower inflation and higher wages are having a pronounced effect on consumer spending behaviours.
“Categories such as hotels and restaurants or consumer technology have really benefited from consumers feeling less of a squeeze on their disposable income.
“In comparison, net spending on utilities and groceries is growing more slowly than consumer spending overall, a reflection of falling fuel prices at the pump and the grocery sector’s intense price competitions.”
Consumer finances have received a boost from the lowest rate of inflation in 14 years, with the prices of food, energy and petrol all tumbling.
It means people are spending less on essentials and have more to put aside for discretionary purchases.
It is good news for retailers after a mixed picture in 2014 and a competitive Christmas period.
But Deloitte sounded a note of caution, not least because of uncertainties surrounding growth in the Eurozone and the May general election in the UK.
Ian Stewart, chief economist, said: “Although consumers have turned more positive on prospects for incomes in the last year, continued uncertainties seem to be affecting their wider perceptions of their welfare.
“For the UK consumer the sort of transient deflation caused by lower oil and other commodity prices will be a significant positive in 2015. Growth in real wages is set to accelerate further.”More on this story