Consumers’ discretionary spending power, defined as the income left over after spending on essential items has been taken out, saw a marginal improvement in December from 12 months earlier, according to the latest Lloyds TSB Spending Power Report.
After inflation, spending power rose by 0.4% compared with a year earlier, albeit from a low base and it still remains below the level of growth one would expect in a stronger economic environment, Lloyds TSB said.
This rise equates to an additional £4 a month in discretionary spending available to consumers.
The rise coincides with a similar shift in consumer sentiment, with the latest consumer research indicating that the proportion of people feeling ‘not at all good’ about the country’s financial situation (48%), the UK employment situation (53%), the housing market (27%) and inflation (34%) all fell in December. However, overall the total number feeling generally negative has remained largely unchanged. At the same time, the number of consumers with money left over at the end of the month has been steadily improving and reached a series high in December, at 34%.
Patrick Foley, chief economist at Lloyds TSB, said: “Discretionary spending power remains under pressure from higher utility bills and anaemic income growth. However with inflation set to fall through much of 2012