Figures from the Office for National Statistics (ONS) have revealed that the volume of UK household spending is decreasing month by month.
According to the data, the amount of money that British households are currently spending has fallen to lower levels than at any other time since records began in 1955.
British consumers are spending lower amounts on luxury items, such as luxury foods, clothing, alcohol and tobacco; as well as cutting expenditure on other costly items such as televisions and other electrical goods.
New car purchases have seen one of the biggest declines in spending, with households reducing the amount they allocate to this area by 25%. However, this sector saw a quick recovery with the number of purchases climbing by 45% at the end of 2009.
Essential and non-essential spending
The ONS data also revealed that cutbacks on non-essential spending grew by almost 10% between the start of 2008 and the middle of 2009, while essential spending only fell by 3% in the same period.
Many British families severely affected by the rising cost of living decided to decrease spending on food – figures show that food purchases fell by an overwhelming 5.6% in that 18-month period. Food prices have increased dramatically following inflation fluctuations.
The new figures were highlighted in the Consumer Spending Report recently published by Lloyds TSB. The report showed that British consumers are still under financial pressure – even after inflation figures took a recent dip.
The combination of low income growth and rising living costs has meant that UK consumers are facing a constant battle to pay their bills and meet everyday expenditure, with little left over for discretionary spending.