We all know how difficult it can sometimes be to make ends meet, but hopefully, people could be enjoying a bit more cash in their pockets, with research from Lloyds Bank finding that spending on essentials fell further in May.
The figures show that, on an annual basis, consumers spent 0.4% less on essentials in May, marking the 18th consecutive month of a drop in spending. However, the pace of that decline is beginning to slow – essential spending fell by 0.9% in April, 0.6% in March and 0.8% in February, making this month's decline the lowest seen in 14 months – but the trend will still come as welcome news to consumers.
Indeed, a key driver behind the fall in spending is the ongoing decline in the cost of fuel, which fell by 4.4% year-on-year in May, while spending on utilities dropped for the 28th consecutive month (outlay on gas and electricity fell by 4.8%). Food and drink costs, which account for around 40% of all essential spending, rose by a minimal 0.1%, but this wasn't enough to result in an overall rise in spending.
In even more good news, people still appear to have disposable income, too, with 81% of respondents saying they have money left over after they've covered all their monthly outgoings. Over half (53%) of those will spend that extra cash, an increase of two percentage points from April, while 18% said they'll use it to pay off debt and 30% will squirrel it away in a savings account.
Perhaps as a result of these positive signs, people's attitude to their current situation picked up in May, buoyed by improved sentiment in their personal financial situation, Britain's employment situation and household financial situation. Perceptions of the country's financial situation also rose slightly, but consumers appear to have a slightly more negative view of the future, which was driven by declining confidence in job security.
Robin Bulloch, managing director at Lloyds Bank, said that people appear to be more confident about their finances, something that "should provide a valuable reference point for any change in sentiment in the months ahead" following the referendum result.
In light of this, Patrick Foley, Lloyds Bank's chief economist, said that "a sense of caution continues to frame consumers' assessment of the outlook, with saving still the most popular choice for any future discretionary income. At the time of the survey, the referendum outcome wasn't known, but if sustained, the recent fall in the currency would put upward pressure on living costs over the next year".
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