Consumer sentiment in the Midlands is up as disposable income increases, according to a new report.

Sentiment in the region rose by 14 points in the first quarter of 2013 compared to the same period last year, according to the Deloitte Consumer Tracker.

This is higher than the national average and the most optimistic consumers have felt about the level of cash they have available since the tracker began in 2011.

However, despite this improvement, disposable income remains under pressure and this continues to be consumers’ main area of concern.

Jane Whitlock, partner at Deloitte in the Birmingham office, said: “The macroeconomic environment for consumers is beginning to improve, albeit very slowly.

“Employment levels are up compared to last year and credit availability has improved.

“Mortgages have become increasingly available, in part as a result of the Bank of England’s Funding for Lending and the Government’s First Buy and Help to Buy schemes.

“Inflation has fallen sharply from the peaks seen in late 2011 and this has lent some support to consumer spending power.”

Deloitte’s recent CFO Survey shows that sentiment in the corporate sector continued to improve in the first quarter.

The perception of macro and financial uncertainty dropped to the lowest level since quarter one 2011.

Ms Whitlock added: “One factor holding back consumer discretionary spending is the still elevated level of inflation and concerns about the pace of price rises over the coming months.

“Certainly, the Bank of England anticipates further upward pressure on inflation through to the middle of this year.”

Improved sentiment was also seen in other measures, job security improved by three points compared to a year ago, while there was a notable improvement in sentiment towards job opportunities.

While sentiment about disposable income has improved, discretionary spending remains subdued with only moderate increases in some categories.

This could be partly attributed to concern about personal debt, which although lower than when the tracker first began, is almost double than the same period last year, Deloitte said.

Between January and March, consumers were less likely to cut back on clothing and footwear and major household appliances, compared to the same period last year.

Rising energy prices have contributed to the increase in the net proportion of consumers who have spent more on utilities in the last quarter, compared to quarter one 2012.