New Lloyds Bank analysis shows 3% year-on-year growth in essential spending putting pressure on outgoings with only 35% of working consumers believing they have seen their household income increase over the last 12 months according to the latest Lloyds Bank Spending Power Report.
In the monthly Ipsos MORI survey of over 2,000 bank account holders in the UK, 36% of working consumers reported that over the last 12 months they have seen no change in their household’s income. Over the same period, 17% of consumers who are not retired believe they have actually seen a decrease in income, with the hardest hit being those either working in the public sector (19%), earning up to £34,999 (19%), or above the age of 35 (19%).
Despite some respite provided by recent reports of falling inflation and an increase in year on year average earnings growth, UK households have experienced pressure on their spending over the past 12 months. This has been exacerbated by rising living costs over the same period. Lloyds Bank analysis of its own customer account data has found 3% year-on-year growth in consumers’ essential spending for February. Gas and electricity spending alone rose by just over 5% year-on-year, the seventh consecutive month of spending increase.
It’s no surprise therefore that consumers reported feeling increasingly pessimistic about the UK’s financial position. Those surveyed are increasingly negative compared to last year about inflation (up 6 percentage points) and the country’s financial situation (5pp).
Robin Bulloch, Managing Director of Lloyds Bank, said:“Whilst consumers will have been pleased to see the gap closing between inflation and wage growth in February, our research shows that UK households still feel they have been under real financial pressure in 2018. Inflation remains high, and people are having to make their money go further as a result of muted household income growth. We would encourage consumers to actively manage their finances and keep an eye on their discretionary spending.”
The Lloyds Bank research has also shown that homeowners, more so than renters, have experienced larger decreases in household income over the past 12 months. Of those who claim their household income has deteriorated, nearly 1 in 4 (23%) homeowners believe it has reduced by more than 20%, whereas only 16% of renters report reductions of the same proportion.