Families '£11-a-year worse off'

Broken piggy bankFamilies had around £11 less a year to spend on non-essential items in November, as budgets remained under pressure in the run-up to Christmas, a study has found.

Lloyds TSB said its latest figures continue a period of relatively weak income growth as wages struggle to keep pace with rising living costs and households remain a long way away from "getting back to normal".

Year-on-year growth in vehicle fuel spending increased for the third month in a row to 4.2%, which was due to people buying more fuel as well as paying higher prices at the pump, Lloyds' latest spending power report said.

By contrast, annual growth in spending on gas and electricity bills declined for the seventh consecutive month, falling to 4.4%.

But energy bills are expected to soar in the coming months following a string of price hikes announced by firms, adding to the squeeze on households.

There was a small decline in people's perceptions towards their own financial situation in November, with 52% stating that their situation is "not at all good" or "not good," rising from 49% in October.

However, attitudes towards future discretionary income have improved, with the the balance of people who believe they will have more money minus those who believe they will have less in six months time rising to minus 7% in November, from minus 9% in October.

Regionally, London has the most positive outlook on the future with a third (33%) stating that they believe they will have either "more" or "much more" money to spend in six months, compared with the national average of 19%.

Patrick Foley, chief economist at Lloyds TSB, said: "For a few months now, spending power in real terms has been flat.

"This is clearly a significant improvement from the start of the year, and is reflected in the consumer sentiment figures. However, consumers remain a long way from getting back to normal."
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