Fall in spending power to lead to more debt issues

Mon, 17 Oct 2011

The rising cost of utility bills is reducing the amount of disposable income available to households.

According to the Lloyds TSB Spending Power Report for September, there was almost zero annual growth in discretionary spending power, which could lead to concerns for many.

It is the second month in a row that this has occurred and incomes are increasing below the rate of inflation at 3.5 per cent.

People living in London are facing the biggest squeeze on their finances, as the effect of gas and electricity hikes is beginning to be felt.

Consumers in general have revealed they are having to cut back on spending and saving in order to make it through the month.

Patrick Foley, chief economist at Lloyds TSB, stated the figures clearly demonstrate that spending power is on the wane.

"Whilst the squeeze on consumers is not as intense as earlier in the year, flat spending power after inflation is still uncommonly weak and explains the high degree of consumer pessimism," he added.

Mr Foley continued by saying that the situation is only going to get worse as energy prices go up and stretch household finances even further.
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