By Max Clarke
Weak income growth over the past year, coupled with long-term above average inflation, is eroding the spending power of UK residents, with correspondingly deleterious effects on the nation’s consumer confidence.
Consumer confidence gauges the overall public anticipation of the state of the economy, and continued unease about inflation, job cuts and spending cuts are affecting household’s desire to spend. The result of this has been a pattern of worsening retail decline, with high streets across the UK struggling to survive. Vacancy rates across the UK have already climbed to 14.5%, and exceed 21% in Yorkshire.
“With an increasing amount of negative news flow around price rises in the last month it is not surprising that this has fed through to consumer confidence,” commented Mike Regnier, director of current accounts for Lloyds TSB. “However, it is also clear that consumers are feeling the squeeze on their spending power. More consumers didn’t have enough to make ends meet, and as a result they are having to dip into their savings to get through the month.”
Income growth edged back by 1.8% over the past year ending July, further delaying hopes of a retail led recovery; whilst Inflation, driven in particular by spikes in electricity and gas prices as well as global increases in food and other commodity prices, has contributed to a UK-wide decline in disposable incomes.
This inflation, particularly in relation to household bills, is causing further concern for UK residents, with nearly 1 in 3 expecting their personal financial situation to deteriorate in the coming months, research from Lloyds TSB reveals.
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