Income growth stutters in the face of rising inflation
A new report on consumer spending power in 2013 has indicated that income growth remains weak as incomes struggle to keep pace with rising inflation levels.
The Lloyds TSB Spending Power Report has revealed that consumers were no better off for December 2012 than during the same period in 2011. The rising cost of essential items as well as the effects of rising inflations levels has countered a small growth in income of 2.9%.
Patrick Foley, chief economist at Lloyds TSB, commented on the significance of the report:
“The latest Spending Power Report shows consumers remain under some pressure. Essential spending growth has clearly been affected by the snow in January, but the picture of weak discretionary spending power remains in place at the start of 2013."
“Looking ahead, inflation is likely to remain high and is expected to pick up in the first half of the year, so what happens to income growth will dictate the extent of the squeeze on households.”
Christmas costs begin to add up
The research also suggests that almost a third of people who actually compiled a budget for Christmas spent more than they originally intended to.
This could mean that the fall in spending power at the start of this year could be exacerbated by Christmas purchases that consumers are still paying for.
Retailers are likely to feel the effects of this latest squeeze on household finances, with consumers increasingly likely to focus their finances on essential purchases.
As a result, high street stores that are already struggling may need to call in a specialist business restructuring advisor to help them deal with the financial challenges ahead.
A corporate insolvency specialist can assist business leaders, financial directors and stakeholders to deliver sustainable solutions for their business.
A number of businesses may find themselves in a financially distressed situation in 2013. Seeking advice at a sufficiently early stage make a crucial difference in terms of how your company deals with the situation.