Spending power confidence drops

The latest Lloyds Bank Spending Power Report shows overall consumer confidence taking a step backwards last month, after seeing an upward trend since the start of the year.

Respondents’ feelings about their current and future financial situations levelled off, with uncertainty in the run up to the General Election potentially restraining confidence towards personal finances (down 1%); household finances (down 1%); and the country’s finances (down 5%).

The data also shows a fall in essential spending in April (-0.8%) , with growth continuing to be held down by lower spend on gas and electricity (-6.7%) and fuel (-8.8%), compared to 12 months earlier.

However, 13% of respondents felt they spent more on going out and treating themselves than they did a year ago – this was particularly the case amongst those aged 55 and over.

Patrick Foley, chief economist at Lloyds Bank, comments: “Households retain a positive view of their financial situation, as a pickup in wage growth and muted inflationary pressures combine 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.”