Squeeze on household purses deepens
According to Lloyds TSB’s spending power report, households are left with £100 a month less than a year ago, once essential items had been paid for, to spend on non-essential goods.
The report indicates that this pinch is due to households having to spend more on essentials like car fuel, gas and electricity, as prices for essentials continue to rise.
It is estimated that spending on essential items is up 3.3% compared to the same period last year, while the average monthly grocery spend fell back to £269 in September compared to £273 in August.
Patrick Foley, chief economist at Lloyds TSB, said: “I expect inflation to fall only slightly further over the coming months so any improvement in the situation will need to be driven by growth in incomes and this will depend on the wider economy.
“The pattern of consumers following rather than driving economic developments appears set to continue.”
Despite recent reports showing that the economy shrank by less than originally predicted, consumers are still pessimistic over the economic outlook.
The proportion who felt the UK’s situation was ‘not at all good’ increased by three percentage points from 42% in August to 45% in September, however this is an improvement of four percentage points when compared to the same time last year.
Overall, those aged 45 and over remain the most pessimistic towards the UK’s economic situation.
Despite greater pressure on household budgets, consumer sentiment towards their personal financial situation remained optimistic during September.
51% believe their personal situation to currently be ‘somewhat good’ to ‘excellent’ while, overall, consumers are generally feeling more comfortable with regards to their finances compared to 12 months ago.
Over this period there has been a 6 percentage point reduction in the number of consumers who feel that money is tight or who don’t have enough to meet their monthly outgoings.
This change in attitude to personal finance has been driven by a more positive opinion opinion amongst people aged 18-34, with the proportion who feel that money is tight or that they don’t have enough to cover essentials falling by 11 percentage points to 48%.
There has also been an increase in saving as Brits continue to squirrel away any money left over after monthly spending on essentials.