Families find themselves with less spare cash at the end of the month as household bills continue to go up relentlessly. Incomes are rising below the rate of inflation, which means they are falling in real terms, and are now 1% lower than a year ago. Real incomes have been falling over the past 16 months.
At the same time, families are having to fork out more for the bare essentials - in particular utility bills. Spending on essentials was up 3.5% in September from a year ago, with spending on gas and electricity 4.7% higher, according to Lloyds TSB. Petrol and water bills have also surged.
London is seeing the biggest squeeze on spending, as incomes grow more slowly than elsewhere in the country, and at 1.1%, well below the national rate of inflation (4.5%).
Households' discretionary spending power, after allowing for inflation, saw almost zero annual growth for a second consecutive month in September.
Nearly half the population (46%) say they are just meeting monthly outgoings and money is tight for them. But despite all the cutbacks, they still have less cash left over to save once all the bills have been paid.
Patrick Foley, chief economist at Lloyds TSB, says: "It is clear that over the last few months initial signs of an improvement in spending power have stalled. Whilst the squeeze on consumers is not as intense as earlier in the year, flat spending power after inflation is still uncommonly weak and explains the high degree of consumer pessimism.
"With further energy price increases still to hit, and little sign of any near-term improvement in economic growth and employment, income growth and spending power are likely to remain under pressure in the coming months."
Energy regulator Ofgem said last week that the average fuel bill for households is now £1,345. Following another round of price rises this autumn, many people are paying £300 more than this time last year.
Tips for reducing your energy bills include switching to a cheaper provider, choosing an online dual tariff, paying by direct debit and taking regular meter readings to ensure you're not overpaying. Pensioners on low incomes qualify for a £120 discount under the Warm Home Discount scheme. There is also the government's Warm Front scheme which offers free home insulation to some people, which can cut bills by £100 a year. Find out if you qualify here.