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Posts Tagged ‘Consumers’

Rising inflation and a lack of credit has forced many Britons into a difficult economic situation, according to Legal & General.

The financial services firm has announced that the number of people who are now living beyond their means has increased significantly in the last six months, with residents in the north found to be particularly hard struck. Research carried out by the group indicated that in this area, the number of people whose outgoings are higher than their monthly income has ballooned by 82 per cent, with 281,000 consumers in the region found to be in this situation. East Anglia and the north-west have also seen their income shrink in the face of increasing costs, with 51 per cent and 47 per cent increases in the number of people living beyond their means recorded in each of these areas respectively.

For consumers who are finding that their salary is insufficient to cover their bills, applying for a payday loan may be useful to replace missing income. On the other hand, for consumers who find this to be a regular issue, a loan for consolidation purposes may be of benefit.

Indeed, it seems that across the country the number of people with money left over after bill payments is contracting. Research from Legal & General has indicated that only 57 per cent of the population has money to put away at the end of each month, meaning that an additional 1.2 million consumers have found their income insufficient in supporting their household in the last six months.

Again, the north was found to be the worst affected region, with a 17 per cent decrease in the number of people with surplus income logged in this area. However, the firm also pointed out that even Londoners are feeling a pinch, with a seven per cent fall recorded in the capital.

Commenting on the figures, Jonathan Latham, director of wealth customer marketing at Legal & General, said: “As inflation takes its toll, the need for investing becomes even greater as digging into reserves looks inevitable for an increasing number, with nearly 5.3 million people now being forced to spend more than they earn. The harsh reality of today means the end of the ’spend now pay later’ culture. We would urge customers to review their finances and carefully look at their spending and savings habits. With some careful budgeting it is possible to keep on saving, even a small amount. If you are having financial problems, it is important that you take action and speak to a debt adviser.”

For those who have found themselves struggling to keep up with spending commitments, taking out a debt consolidation loan may be an effective way of getting finances back on track. By spreading out payments in this way, people may find that they can avoid the risks of defaulting on commitments. Opting for this type of loan might be of particular interest to those people who are considering selling their property to avoid repossession after the Motley Fool warned that many buy and rent back schemes come with clauses that could put consumers in a vulnerable position.

A new countrywide consumer poll from Lloyds TSB has indicated that worries about food, fuel and energy costs are forcing expectations of high inflation in the coming year.

The consumer barometer identified that average expectations for inflation in the next 12 months were found to approach four per cent, as opposed to the official three per cent set out by the Bank of England’s monetary policy committee’s (MPC’s) quarterly retail price index (RPI) report. Conducted earlier this month, the barometer questioned 2,000 adults throughout the UK and found that 90 per cent felt that average prices had risen in the past 12 months, compared to the 63 per cent recorded in May 2007. A further 89 per cent said they expected prices to increase again in the next 12 months. Both of these results were at their highest level since 2004.

Respondents to the study envisaged that by this time next year, inflation would be up to 3.8 per cent, up from 3.6 per cent estimated in last year’s survey. Lloyds TSB also suggested that consumer confidence in employment and their own job security was also slipping. Nearly a quarter (23 per cent) of respondents said they felt their job was less secure than it was a year ago, while 48 per cent of people said that overall employment prospects in the UK had got worse in the past 12 months.

For those who have found themselves struggling with general living expenses, taking out a low-rate loan may be of assistance in meeting the costs of food and energy. Meanwhile, consumers who have become increasingly indebted as living costs soar, taking out a debt consolidation loan may provide a lifeline.

Trevor Williams, chief economist at Lloyds TSB Corporate Markets, said: “Currently at three per cent, there is no disputing that the current prediction is that inflation will stay high. However the latest report from the Bank of England suggested that in the long term inflationary pressures would ease as food and fuel prices start to fall in the next 12 months. In stark contrast to this, our latest barometer shows that consumers do not believe prices will ease and so inflation expectations for the next 12 months are tipping four per cent. The MPC continues to highlight the need to anchor inflation expectations as key to bringing actual inflation under control.”

He added that any future cut in the interest rate would send the wrong message to consumers. Mr Williams suggested that the UK will be in for a period of flat or rising interest rates if consumer expectations continue to rise.

In a press conference following the MPC’s May RPI publication, Bank of England governor Mervyn King attributed the current rise in inflation to increasing global costs of food and energy. He added that consumers will continue to feel the effect of these inflated prices over the course of the next 12 to 18 months and as such, he asserted that it “doesn’t make sense” to focus on bringing inflation down to the Bank’s target level of two per cent within this timeframe. However, Mr King said that “we should certainly” look to tack inflation back to this level in two years’ time.

Although it held the base rate of interest in its last decision, the MPC has made two cuts so far this year. In April, the base rate was cut by a quarter of a percentage point to stand at its current level of an even five per cent.

A new countrywide consumer poll carried out by Lloyds TSB has indicated that concerns about food, fuel and energy costs are driving expectations of high inflation in the year to come.

The consumer barometer identified that average expectations for inflation over the next 12 months were going to be nearing four per cent, and not the official three per cent set out by the Bank of England’s monetary policy committee’s (MPC’s) quarterly retail price index (RPI) report. Carried out early last month, the barometer questioned 2,000 adults throughout the UK and discovered that 90 per cent felt that average prices had gone up over the past year, compared to the 63 per cent recorded in May 2007. An additional 89 per cent said they expected prices to increase again over the next 12 months. Both of these results were at their highest level since 2004.

Respondents to the study predicted that by may 2009, inflation would stand at 3.8 per cent, up from 3.6 per cent estimated in last year’s survey. Lloyds TSB also suggested that consumer confidence in employment and their own job security was also falling. Nearly a quarter (23 per cent) of respondents said they felt their job was less secure than it was a year ago, while 48 per cent of the people said that overall, employment prospects in the UK had got worse over the past 12 months.

For those who have found themselves failing with general living costs, taking out a cheap loan may be of assistance in meeting the costs of food and energy. Meanwhile, consumers who have become increasingly indebted as living costs soar, taking out a debt consolidation loan may provide a lifeline.

Trevor Williams, chief economist at Lloyds TSB Corporate Markets, said: “Currently at three per cent, there is no denying that the immediate outlook for inflation remains high. But the Bank of England’s latest report projected that inflationary pressures would ease in the long term as food and fuel prices start to fall next year. In stark contrast to this, our latest barometer shows that consumers do not believe prices will ease and so inflation expectations for the next 12 months are tipping four per cent. The MPC continues to highlight the need to anchor inflation expectations as key to bringing actual inflation under control.”

He added that any future cut in the interest rate would send the wrong message to people. If consumer expectations of inflation continue to rise, the UK will undergo a period of flat or increasing interest rates in order to bring inflation back under control, Mr Williams concluded.

In a press conference following the MPC’s May RPI publication, Bank of England governor Mervyn King attributed the current rise in inflation to rising global costs of food and energy. He added that consumers will continue to feel the effect of these inflated prices over the course of the next 12 to 18 months and as such, he asserted that it “doesn’t make sense” to focus on bringing inflation down to the Bank’s target level of two per cent within this timeframe. However, Mr King said that “we should certainly” look to bring inflation back down to this level in two years’ time.

Although it held the base rate of interest in its last decision, the MPC has made two cuts so far this year. In April, the base rate was cut by a quarter of a percentage point to stand at its current level of an even five per cent.