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Consumers continue to feel spending power squeeze

By Daniel Culpan

18 June2021

pile-of-receipts According to research by Lloyds TSB, discretionary spending power dropped by 0.3% in May, as real incomes continued to feel the pinch in the current climate. This means the average person has almost 34 a month less to spend on non-essentials than a year ago.

This dip in spending power (after inflation) shows that things remain tough for UK consumers, due largely to the effects of weak income growth. However, the research did indicate some positive signs for consumers.

Growth in essential spending dropped from 4.6% to 3.9% in May, which could reflect consumers beginning to feel the impact of falling inflation.

Yet despite this, it seems that many people are still struggling with the effects of inflationary pressure on their finances. 79% of people think the current level of inflation is 'not good' or 'not at all good', while the number of people surveyed who say they've seen everyday costs rise in the past year remains high at 83%.

What's more, with 63% of consumers spending at least 75% of their monthly income on bills and other essentials, an increasing number of people could be at risk of debt problems should their circumstances change for the worse.

Jatin Patel, director of current accounts for Lloyds TSB, commented: "Consumers are still under real pressure financially, but we are beginning to see some initial signs that the squeeze on household finances may be easing as affordability of essential items improves."

Image iStockPhotos / Kitty Ellis

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Tags: debt, spending, economy, employment, wages, Lloyds TSB, inflation, bills

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