Record squeeze hits family budgets
Families are feeling the biggest squeeze on their spending power in more than a year, a study has warned.
Consumers' spending power deteriorated further in March, falling by 1.1% on a year earlier after inflation, its lowest level since February 2011, equating to £113 less a year to spend on non-essential items, said the Lloyds TSB Spending Power Report.
Spending on essentials is rising at its fastest rate since the records began in June 2010 at 6.2% annually, largely driven by an increase in food and drink, gas and electricity bills and debt payments.
Consumers also spent a third more on vehicle fuel in the last week of March compared with the week earlier as the threat of strikes loomed, the study said.
There was a 12% rise in spending on vehicle fuel in March compared with the previous month as people rushed to the pumps and more than six in 10 people said they are spending more on petrol and diesel than they were a year ago.
Meanwhile, income growth remains below inflation and has slowed to its weakest rate in more than a year, to 2.4% from 12 months ago.
Patrick Foley, chief economist at Lloyds TSB, said: "Although overall inflation declined in the five months to March, prices of essentials are rising at an increasing rate, whilst at the same time growth in incomes has slowed."
Nearly three quarters of those surveyed had noticed an increase in the cost of essentials and everyday spending, while just 19% believe costs have remained the same or decreased.
Richard Lloyd, Which? executive director, said: "We know a great swathe of UK consumers are finding it tough, with people struggling with rising fuel, energy, mortgage and food costs."
He added: "With consumer confidence so low, and people running down their savings and assets, an increasing number of household budgets will remain vulnerable until at least 2016."