By This Is Money Reporter
|
The squeeze on consumers is not yet beginning to ease as families face the biggest fall in their spending power in more than a year.
Consumersâ spending power deteriorated further last month, falling 1.1 per cent on a year earlier after inflation, according to the Lloyds TSB Spending Power Report.
This is its lowest level since February 2011, which equates to £113 less a year to spend on non-essential items.
Drop in special offers: Inflation rose unexpectedly last month as the number of supermarket promotions fell
Spending on essentials is rising at its fastest rate since the report began in June 2010 at 6.2 per cent annually, largely driven by an increase in food and drink, gas and electricity bills and debt payments.
The Lloyds TSB report defines spending power as income left over after spending on essentials. It measures payments into Lloyds TSB current accounts and subtracts regular spending such as rent, mortgage payments, debt payments, utility bills, council tax, TV licences, food and fuel. The study also asks 2,000 consumers about their spending habits.
Consumers also spent a third more on vehicle fuel in the last week of March compared with the week earlier as the threat of strikes loomed, the study said.
There was a 12 per cent rise in spending on vehicle fuel in March compared with the previous month as people rushed to the pumps and more than six in 10 people said they are spending more on petrol and diesel than they were a year ago.
Meanwhile, income growth remains below inflation and has slowed to its weakest rate in more than a year, to 2.4 per cent.
Squeeze: Spending power, after inflation, was 0.4% lower in February compared to a year earlier, which equates to around £45 less a year available to consumers to spend on non-essential items
Patrick Foley, chief economist at Lloyds TSB, said: âContrary to expectations at the start of the year, the squeeze on consumers is not yet beginning to ease.
âAlthough overall inflation declined in the five months to March, prices of essentials are rising at an increasing rate, whilst at the same time growth in incomes has slowed.
âThe pace of economic recovery is thus likely to remain very weak over the next few months at least, with subsequent improvement dependent on a stabilisation in living costs and impetus for growth from outside the consumer sector, particularly exports.â
Nearly three quarters of those surveyed had noticed an increase in the cost of essentials and everyday spending, while just 19 per cent believe costs have remained the same or decreased.
Seven out of 10 people said they were concerned about fuel price hikes while three quarters of those surveyed were worried about the effects of inflation on gas and electricity prices.
In February spending on essentials grew 6% year on year, the fastest rate in almost two years
Figures released last week showed that a fall in the number of supermarket promotions triggered an unexpected rise in the rate of inflation in March.
The CPI rate of inflation rose to 3.5 per cent, from 3.4 per cent in February, the Office for National Statistics (ONS) said, halting five months of declines and defying City expectations that it would hold steady.
Households have come under intense pressure due to high inflation and soaring bills, while employment conditions have deteriorated and record low interest rates have given people little real return on their savings.
The Lloyds TSB report defines spending power as income left over after spending on essentials. It measures payments into Lloyds TSB current accounts and subtracts regular spending such as rent, mortgage payments, debt payments, utility bills, council tax, TV licences, food and fuel. The study also asks 2,000 consumers about their spending habits.
Richard Lloyd, Which? executive director, said: âWe know a great swathe of UK consumers are finding it tough, with people struggling with rising fuel, energy, mortgage and food costs.
âOur own research shows one in four people being forced to use their savings to buy daily essentials like food, and one in five going into debt to buy these things.
âWith consumer confidence so low, and people running down their savings and assets, an increasing number of household budgets will remain vulnerable until at least 2016.â
- Stunning black and white pictures of a nation's rural ruins,...
- Too much Botox? Carla Bruni is 'barely recognisable as the...
- Following in Prince Harry's footsteps, Princess Beatrice...
- 'They could easily have killed': The two young men held for...
- 'I used a spy camera to catch a care home thug beating up my...
- We're going to need more candles! Oldest man in the world...
- 100,000 women undergo brutal genital mutilation illegally in...
- When Victoria met Albert: Tender letter reveals how Queen...
- Actors in film about fleeing Cuba arrive in U.S. for film...
- Charity donations rocket to £35,000 for hairdresser, 30, who...
- A VERY Big Mac! World's biggest McDonald's with 1,500 seats...
- Mystery of Russia's missing First Lady: Is Putin's 'affair'...
Share this article:
Here's what other readers have said. Why not add your thoughts, or debate this issue live on our message boards.
The comments below have not been moderated.
- Newest
- Oldest
- Best rated
- Worst rated
What purpose does this article achieve
Report abuse
No worries, household spending power for many will soon recover as house prices correct themselves downward, by about 30% to theor long-term nea, thereby freeing up a lot of income that now goes towards paying the mortgage.
Report abuse
The views expressed in the contents above are those of our users and do not necessarily reflect the views of MailOnline.
Tidak ada komentar:
Posting Komentar