Fall in Household Income Blamed on Inflation and Personal Debt

In July it has been reported that household finances have worsened resulting in a reduction in the spending power of consumers in the UK.

Nearly 40 per cent of households stated that their financial situation had worsened, according to the latest report from Markit, which uses Ipsos Mori data to forecast trends in consumer spending.

Its Household Finance Index is at a 2.5 year low. Only 6 per cent of households reported that their finances had actually improved in July. The research group blamed an increase in personal debt levels and inflation for the downcast findings, with personal debt levels rising for the 4th month in a row.

In particular people earning less than £13,500 are more likely to own double their annual salary according to recent research by the Consumer Credit Counselling Service (CCCS). As the Office of Budget Responsibility has predicted that over the next few years the percentage of debt as a share of household incomes will increase the situation isn’t set to improve.

“The mood among British households has been as gloomy as the weather this summer,” said Markit’s senior economist, Tim Moore. “Higher living costs and stretched disposable incomes continue to weigh heavily on consumer finances.”

The research showed, however, that the majority of people questioned said that they were more optimistic about the next 12 months so it’s not all bad news.

Anyone struggling to pay personal debts should seek advice. Personal Debt Helpline offers advice and a range of debt solutions tailored to meet your needs including debt management plans, individual voluntary arrangements and bankruptcy.

Contact us on 0800 6 888 888 for confidential advice under no obligation or check out our website www.personaldebthelpline.co.uk for more information.