Inflation is weakening household budgets, study finds

UK households are struggling to deal with the effect of inflation on their budgets.

Research by Lloyds TSB has found that spending power growth fell to -0.1 per cent in November, which means that people had the equivalent of £11 less a year to spend on non-essential items.

While it may not seem like a significant sum, it is the last thing that individuals who are already struggling to make ends meet need in the run-up to Christmas.

The figures, detailed in the Spending Power Report, point to the continuous period of relatively weak income growth in real terms that the UK is experiencing at the moment. Because of this, households who do not have enough money to get by may want to consider seeking out a debt solution.

Taking action sooner rather than later is the best course of action, as failure to do so could see the problem spiral out of control further down the line.

Britons do not seem to be optimistic about the state of the economy at the moment, as 44 per cent said they think the financial situation of the UK is not good at all, while 52 per cent said the same thing about their personal finances.

Some 87 per cent are not happy with employment opportunities in the nation and 50 per cent admitted that money is tight at the moment.

A sign of the problems currently facing many households is that 46 per cent of people are having to use three-quarters of their income on bills and essentials – the same level as in June of this year. If there is no improvement in this figure in the next few months, then families will continue to struggle to get by.

On top of this, there is a net balance of only two per cent of those questioned who expect to be saving more than they are at the moment in six months' time.

By Joe White