UK shoppers are feeling increasingly strained about splashing their cash because only a third feel better off than a year ago, new research has found.
The latest Lloyds Bank Spending Power Report, which surveys over 2,000 bank account holders in the UK, revealed that only 35 per cent of working consumers felt their household income had increased over the last 12 months.
It said that 36 per cent reported that they have seen no change in their household’s income but over 17 per cent of consumers, who have not retired, believe they have actually seen a decrease.
Of those the hardest hit were either working in the public sector, earning up to £34,999 or above the age of 35.
Despite some respite provided by recent reports of falling inflation and an increase in year on year average earnings growth the Lloyds report found that UK households have experienced extra pressure on their spending power over the past 12 months squeezing outgoings.
It said that there was a three per cent year-on-year growth in essential spending – such as debt payments, utility bills, council tax, TV licences, food and fuel, during February with gas and electricity up by over five per cent year-on-year.
That is the seventh consecutive month of spending increase.
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Lloyds said it was “no surprise” that consumers reported feeling increasingly pessimistic. Those surveyed were found to be increasingly negative compared to last year about inflation and the country’s financial situation.
“Whilst consumers will have been pleased to see the gap closing between inflation and wage growth in February, our research shows that UK households still feel they have been under real financial pressure in 2018,” said Robin Bulloch, managing director of Lloyds Bank.
“Inflation remains high, and people are having to make their money go further as a result of muted household income growth. We would encourage consumers to actively manage their finances and keep an eye on their discretionary spending.”
The Lloyds Bank research also showed that home owners, more so than renters, have experienced larger decreases in household income over the past 12 months.
Of those who claim their household income has deteriorated, nearly one in four homeowners believe it has reduced by more than 20 per cent, whereas only 16 per cent of renters report reductions of the same proportion.
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