22nd May 2015
Consumer spending confidence has dropped slightly but still remains near record highs.
The latest Lloyds Bank Spending Power Report shows that confidence took a backwards step last month after an unbroken upward trend this year. Feelings towards current and future financial situations levelled off in April due to uncertainty around the general election.
Confidence in personal finances was down one percentage point, household finances confidence was down the same and confidence in the country’s finances fell five percentage points. The overall index fell three percentage points to 155 in April.
However, the figures are still near record highs which could be prompted by continued fall in essential spending of -0.8% overall, with gas and electricity falling -6.7% and fuel spending down 8.8% compared to 12 months earlier.
People are also spending more on treating themselves and going out, with 13% stating they have up this spending compared to a year ago.
Patrick Foley, chief economist at Lloyds Bank, said: ‘Households retain a positive view of their financial situation, as a pick-up in wage growth and muted inflationary pressures combined to strengthen real incomes.
‘A more cautious assessment of future prospects continues to prevail, however. But against a backdrop of improving labour market conditions, and the lifting of some near term uncertainty following the election, a solid pace of growth seems likely to unfold this year.’
Feelings about the future is mixed and the bank’s Future Situation Index dropped for thee first time this year. Anticipated future spending remains stable, with around two thirds of people stating they do not expect their spending habits to be different in six month’s time.