Consumers are shrugging off concerns about a spending squeeze with increased confidence in their personal finances, according to the latest Lloyds Bank Spending Power Report.
The latest poll – which saw Ipsos MORI survey 2,000 people with bank accounts across the UK – comes amid a raft of economic data highlighting the challenges faced by the UK economy. However, 64% of consumers reported feeling good about their personal financial situation in June. This was up slightly from 63% in May, and is just 2pp off the level seen in June last year.
This is in stark contrast to how consumers feel about the wider economy with only a third (33%) feeling good about the country’s financial situation, down from 45% in June last year. A similar split in sentiment exists on employment, with 8 out of 10 consumers feeling good about their own job security (80%, up 1pp from May), but only just over half (53%) positive about the overall employment situation in the UK (up 2pp from May).
Despite a dip in inflation in June, ongoing pressure on household budgets from rising prices is borne out by Lloyds Bank’s analysis of its own customer data. This shows that the year-on-year growth in consumers’ essential spend for June was around 3%, up from around 2% in May. This is the highest rate of growth since the survey began in early 2013.
The majority of those surveyed (60%) continued to report concern about current levels of inflation. However, tenure appears to be a significant factor with 71% of renters feeling negative about inflation, versus only 54% of homeowners.
Emma Greenwood, Head of Personal Current Accounts at Lloyds Bank, said: “Despite positive perceptions of their own personal finances, the difference in sentiment towards the country’s financial situation points to a lingering consumer unease about the broader outlook. For some, this may reinforce a reluctance to spend. Meanwhile, the brisk pace of price rises will keep household budgets under pressure. Even though inflation dipped a little in June, prudent households will want to take stock of their finances and ensure there are prepared for a greater squeeze on their spending power.”