Almost two thirds now feeling negative about current levels of inflation
Inflation worries have reached their highest level since January 2014 as consumers continue to feel the impact of rising prices and sluggish wage growth, according the latest Lloyds Bank Spending Power Report.
The monthly poll – which sees Ipsos MORI survey over 2,000 adults with bank accounts across the UK – found that 65 per cent of people reported feeling negative about current levels of inflation in July, compared to 60 per cent in June, and just 41 per cent in July 2016.
Confidence in the country’s financial situation has also deteriorated, with those feeling negative up 2pp month-on-month in July, and up by 7pp over the last 12 months to now stand at 69 per cent.
Despite continuing worries over the economy, people remain optimistic regarding their own circumstances, with 64 per cent of people feeling positive about their personal financial situation in July, unchanged from June, and just 3pp below the level seen in July 2016. Meanwhile 79 per cent of people reported feeling positive about their own job security, down just 1pp on June and 2pp above the level seen in July 2016.
The future outlook seems more uncertain though, with July seeing a 7pp decrease in the proportion of people who believe in six months’ time they will be saving more’ than now (down from 27 per cent in June to 20 per cent in July). The proportion of people who believe that in six months’ time they are going to be paying off more debt than now also decreased significantly by 5pp (from 20 per cent in June to 15 per cent in July).
Meanwhile, Lloyds Bank’s analysis of its own customer account data showed that the year-on-year growth in consumers’ essential spend for July was around 2 per cent, down from around 3 per cent in June. Food, accounting for c.40 per cent of essential spend, had a year-on-year rise of around 2 per cent, down from a high of 4 per cent in June. Meanwhile fuel spend rose by around 5 per cent, the lowest rate of growth since October last year, significantly down from the peak of around 13 per cent in April this year.
Robin Bulloch, Managing Director of Lloyds Bank, said:
“Despite a slight slowdown in the rate of essential spending growth over the summer, concerns around inflation have continued to build, which has an impact on future intentions. With the rate of savings already at a record low, significantly fewer people now expect to be putting more money aside in six months’ time. While the pressure on disposable income makes this understandable, it does mean consumers are less able to absorb any further squeeze on their finances.”