Two new studies from Lloyds TSB have shown that although some of the pressures on household budgets are relaxing, the picture is far from good. In fact, the best thing you can say is that things aren’t getting worse as quickly as they were.
There have been good signs coming from figures released in the last couple of months, showing that inflation is slowing down and coming further into line with the very slow increases in wages that people are seeing. Whilst that’s good news, it just meant that living costs were no longer accelerating as far ahead of people’s budgets as they were before; people’s spending power wasn’t increasing, it just wasn’t reducing as quickly.
The data from Lloyds TSB shows that all the last couple of months have done is put us back at the same position we were in April 2011, and we have had plenty of ups and downs since then. It also offers some grim predictions on the future, expecting that fuel and food costs will both rise over the next few months and reverse the trend we’ve seen.
This, of course, is bad news for households, but it’s also bad news for the economy. Lloyds have looked into the likely effects of this continued reduction in households’ ability to spend and believe that it will mean high streets continue to suffer, meaning fewer businesses make profits, which will continue the downwards spiral of the economy.
We’ve yet to see figures for August, and it’s possible that the influx of guests to London for the Olympic Games will show some good news, but it’s September, October and onwards that will reveal the true state of Britain’s economy, and these reports from Lloyds TSB appear to show they are banking on it getting worse.