Author Lauren Howells
UK consumers’ concerns about inflation are at their highest level since January 2014 and how people feel about the country’s financial situation has also deteriorated.
In a poll of 2,000 people by Lloyds Bank, nearly two thirds (65%) of respondents said that they were feeling negative about the current levels of inflation in July. This is in contrast to only 60% in June and just 41% in July 2016.
Confidence in UK’s financial situation weakened
Lloyds also reported that confidence in the country’s financial situation had been dented, with 69% of people reporting feeling negative about the UK’s economy as a whole, up by 7 percentage points over the last 12 months.
People remain optimistic regarding their own circumstances
The proportion of people who felt positive about their personal financial situation in July was 64%, the same as June and only 3 percentage points less than what was reported in July 2016.
Additionally, over three-quarters of people (79%) said that they felt positive about their own job security, compared to 80% in June and 77% in July 2016.
Future outlook seems more uncertain
Lloyds reported seeing a decrease in the proportion of people who believe they will be saving more in six months’ time than now, down from 27% in June to 20% in July.
The proportion of people who believed that they would be paying more debt off in six months’ time also fell significantly, to 15% in July, compared to 20% in June.
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.”
People may be cutting what they spend on essentials
Lloyds Bank reported that its consumer account data showed that the year-on-year growth in consumers’essential spend was down to around 2% in July from around 3% in June.
Food, which accounts for around 40% of consumers’ essential spend, showed a year-on-year rise of around 2%, dropping from 4% in June.
Fuel spend had its lowest rate of growth (around 5%) since October 2016, a significant drop from its peak in April 2017 of around 13%.
In July, figures released by Visa revealed that UK consumer spending had fallen for the third consecutive month, the longest period of decline since the five month period ending in February 2013.
Inflation remained flat in July, at 2.6%.