Real household incomes ‘back at 2005 levels’

Consumers struggling to meet their debt repayments may be finding matters harder because their incomes have fallen in real terms to 2005 levels.

Data published today (July 31st) by the Office for National Statistics has found real household income dropped by 0.6 per cent in the first quarter of 2012 compared with the last three months of 2011, taking it to a level last seen in the second quarter of 2005.

The study also found that real household spending dipped by 0.2 per cent in this period, to the second lowest level since the third quarter of 2003.

Consumers whose incomes have been squeezed by low pay rises and inflation – albeit with the latter waning in recent months – may find they need debt help to cope with what they owe.

Some people who have struggled to meet debt repayments have turned to payday loans, but this has only made matters worse for thousands.

The Money Advice Trust recently revealed its National Debt Line took 9,500 calls from people struggling because of payday loans in the past six months, a 116 per cent rise on the same period in 2011.

By James Francis