Finances still tight despite inflation dip
BRITONS’ spending power has continued to fall at the start of 2012, according to a fresh survey, despite a slowdown in inflation.
Spending power was 0.9 per cent lower in January than a year earlier, in real terms, research by Lloyds TSB has revealed this morning.
This is the equivalent of £100 less to spend on non-essential products during the year, Lloyds said, while nearly one in five consumers say they have no discretionary income left over at all, once essential items have been bought.
Over eight in 10 respondents (84 per cent) remain concerned about inflation, the survey showed.
Yet some relief may be on the horizon for UK workers, with a separate survey claiming that employers are preparing to hike wages.
Pay intentions have reached their highest level since spring 2009, the Chartered Institute of Personnel and Development (CIPD) said.
Pay settlement this year should see a rise of 1.7 per cent, according to the mean average of answers gathered by the CIPD – up from 1.5 per cent in the previous quarter and 1.3 per cent at the same time last year.
Over a third of private sector employers (35 per cent) expect to grant pay rises, while even in the government sector one in three employers said it will boost workers’ pay packets.
And the painful squeeze on household incomes could be bottoming out, according to a separate report also released today.
The widely-regarded Markit household finance index showed February’s deterioration as the slowest in 14 months.
The index rose to 38.7 this month from 36.4 in January. All figures below 50 indicate a decline in average finances.
Households are becoming less pessimistic about their financial prospects for the year ahead, the survey found.
“Mortgage holders in particular were much less downbeat about their financial outlook,” said Markit economist Tim Moore, “probably helped by expectations of continued low interest rates and hopes that this will keep a floor under property prices.”