Spring was an ‘agonising season’ for personal finances

ii's Myron Jobson comments on figures from UK Finance on consumer spending for Q2 2022.

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Spring was an agonising season for personal finances, with a hike in the energy price cap adding £693 on to the average yearly energy bill, while rises in council tax in many areas, the cost of broadband, mobile phone tariffs, food and petrol tightened the squeeze on households budgets.

“Borrowing increased amid the biggest fall in living standards in generations, but while overdraft levels rose gradually in Q2 this year, it remained 5% below pre-pandemic levels - suggesting that Covid and the cost-of-living crisis have made many people re-evaluate their spending and savings habits. People understood the squeeze on household budgets is only going to get worse this year, with inflation expected to rise further – although not as high as feared once the new energy support measures come into play. For many, taking out more debt would add to the already weighty pressure on their budget.

“Household savings built up during the pandemic are still going strong – but haven’t grown. This suggests that our enthusiasm for saving has been renewed following a reprieve in savings rates from rock-bottom levels after increases to the rate of interest. There is also a budding appreciation of the importance of building an ample cash buffer amid rising prices.  The harsh reality is rising prices eat into the amount many people have to save for everything else.”