Overall essential spending grew by 1.8% in December, a fourth consecutive month of positive growth. Lloyds Bank’s analysis of its own current account data also shows that spending on groceries leapt by 2.9% year-on-year – the highest rate of growth since July 2013, and up significantly from the rate of 1.6% in November.
Fuel expenditure, which declined consecutively for almost three years until rising in September 2016, rose sharply by 9.0% year-on-year, a fourth consecutive month of increasing spend and the biggest year-on-year increase on record.
With UK Consumer Price Inflation hitting 1.6%, Lloyds Bank’s regular consumer survey – conducted in conjunction with Ipsos MORI – found that the percentage of people with a negative view of inflation grew again in December, by 2pp, to now stand at 51%. Faced with increased outgoings and sustained inflation, over half (56%) of those interviewed said they planned to cut back on non-essential spending in January.
Robin Bulloch, Managing Director, Lloyds Bank said: “The surge in essential spending over the last few months shows no sign of abating. With a majority of people expressing concern around current levels of inflation, it’s no surprise that most consumers plan to cut back on luxury items. A squeeze on household budgets now looks ever more certain as we move through 2017.”
Year-on-year growth in essential spend: January to December 2016
Source: Lloyds Bank