Consumers have had it tough over the last few years. Rising prices, stagnant wage growth and a lack of faith in the economy at large have all taken their toll, but it seems that things are definitely on the up.
According to the latest Spending Power Report from Lloyds Bank, overall consumer confidence rose to a new high in July (reaching 147 points) after taking a slight dip in June. This resumed climb indicates that consumers are feeling a whole lot better, both about the economy and their finances, than they have done in some time.
Key findings from the report include the fact that essential spending has fallen by around 0.5% over the last year, the first decrease in the history of the Spending Power Report, led by reduced spending in gas & electricity, fuel, and food & drink. The latter makes up around 40% of typical monthly spending and this in itself slowed by around 2.5%. Thanks to this reduced pressure from essential spending, the way is hopefully being opened up for spending on non-essential items.
Overall sentiment towards the UK's economic situation, despite decreasing slightly from June's total, is still 33 points higher than this time last year, indicating an annual improvement in positivity. Consumers are also becoming increasingly positive about their personal financial situation, with many feeling they have more money left in their back pocket after paying the bills, and this positivity is continued in their outlook for the future.
This level of confidence is welcome news for consumers and the economy as a whole, as it would indicate that things are starting to get back on track for much of the population. People are also becoming more positive about their ability to save, a welcome adjustment after years of budgets being squeezed, and it'll be beneficial in the long-term, too – being more able to put aside some money each month means people will be able to build up a valuable emergency fund, something that could definitely come in handy should the unexpected happen.
Philip Robinson, director of personal current accounts at Lloyds Bank, commented on the findings: "With consumer confidence resuming its steady increase to a new high, and discretionary income improving as essential spending falls, more people are feeling more comfortable about their own finances. It's not a bad time to make sure we're all putting enough away for a rainy day or starting to get ready for a rise in interest rates."
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