Household income drops for fourth consecutive quarter
HOUSEHOLDS in Britain have seen their spending power fall for the fourth consecutive quarter – the longest period of decline for almost six years.
Income after taxes per head fell by 1.1 per cent in the second quarter compared with a year earlier, according to figures from the Office for National Statistics (ONS).
For the first time in two years, consumers reported a worsening in their perception of their own financial situation.
GDP per head increased by 0.9 per cent and net national disposal income per head was up by two per cent. But the ONS said disposable income per head is a better representation of the income available to all residents to spend or save.
Wages and salaries grew year-on-year, however these were overshadowed by higher prices.
Separate figures from the British Retail Consortium show food prices shot up in September to their highest level in almost four years.
Richard Lim, chief executive of Retail Economics, said this was due to pressures from commodities and the Brexit-induced fall in sterling.
“This will hit the least affluent households the hardest given they spend a much higher proportion of their expenditure on food,” he warned. “The knock-on consequence is for discretionary spending to be squeezed even further in the coming months.”
Read more: Consumer spending hits four-year low
Jane Goodland, responsible business director at Old Mutual Wealth, said the decline in consumer confidence intensifies the need for greater availability of financial advice.
She argued that people with a financial plan are significantly more optimistic about their financial security.
“There needs to be greater availability and consistency of financial guidance and advice so that we ensure that the decline in people’s economic well-being does not become a trend,” she added.