Spending power down, cost of living up, wages stagnating and debts up
Published at 14:08, Friday, 25 May 2012
Families have £100 a year less to spend now than they did 12 months ago. Consumers’ spending power fell 0.9 per cent in April, compared with a year earlier, according to the Lloyds TSB Spending Power Report.
Households have suffered because inflation – the rise in the cost of living – has outstripped wage increases.
Although inflation has been falling, income growth is still way behind at just 2.2 per cent, down from 2.4 per cent in March.
Meanwhile, negativity towards the economy increased, with more than half believing it to be “not at all good”.
Patrick Foley, chief economist at Lloyds TSB, said: “Household finances are still under real pressure despite the significant falls in inflation we have seen over the past seven months.
“Although unemployment has been broadly stable, wage growth has eased and so incomes are growing well below their long-term average.
“Even though we expect to see further falls in inflation, the weakness in the broader economy is likely to mean that consumers aren’t going to feel any better off in the near future.”
Some 86 per cent of consumers noticed an increase in the cost of everyday spending compared to a year ago, up from 73 per cent in March.
Two-thirds think they paying more for petrol and 60 per cent believe groceries are dearer.
Spending on essential items was up 4.6 per cent on a year ago but April’s reading was in-line with that of the previous two months, meaning the sharp acceleration seen at the start of the year appears to have ended. Jatin Patel, Lloyds TSB director of current accounts, said: “There was little respite for consumers in April and it is clear that a growing number are feeling concerned about the state of the UK’s economic situation.
“This will not have been aided by news suggesting that the UK has entered into a double dip recession, while continued weak income growth and rising prices act as a very tangible drag on sentiment.
“While spending power is not being eroded at quite the same pace as the beginning of last year, events in the global economy will likely have a significant bearing on consumer spending power in the months ahead.”
A debt line which helped thousands of people struggling with financial hardship has won funding to continue its work.
The Northern Debt Line has handled more than 3,600 debt enquires in the north east and Cumbria since its launch in 2010.
Now residents can continue benefiting from the free and independent service after the Northern Rock Foundation pledged funding to extend the service for a further two years. Details of the amount have not been released.
Liz Chadwick, the chief executive of Dawn Advice, which manages the service, said: “The Northern Debt Line provides an invaluable service, particularly in the current climate, and there are signs that demand for impartial, free advice will only continue to grow.
“We are therefore delighted that the future of this service has been secured thanks to this vital injection of funding.”
The telephone advice line was first launched as part of a £1.5million scheme to improve access to advice services for people living in rural areas. Penny Wilkinson, chief executive of the Northern Rock Foundation, said: “Through the organisations and services which it supports, the Northern Rock Foundation is dedicated to tackling disadvantage and improving quality of life in north east England and Cumbria.
The availability of independent financial advice will remain critical for our region and we are proud to be able to support the fantastic work which Dawn Advice is doing through the Northern Debt Line.”
The helpline is available at www.dawnadvice.org.uk or call 0300 333 3445.
Published by http://www.cumberlandnews.co.uk