The sun has been shining, a Prince has been born and consumers are feeling more positive about the economy.
For the first time since Which? launched our Consumer Insight Tracker in July 2012, more consumers now think that the UK economy will get better in the next 12 months compared to those who think it will get worse.
However this optimism is not filtering through to how consumers feel about their household finances, with levels of worry about rising food, fuel and energy prices still high.
This is affecting consumer behaviour with one in three people – that’s 9.5million households – now cutting back on essentials.
The latest monthly figures are outlined below:
Consumers feeling positive about the UK economy
- More consumers (36%) now think the UK economy will get better in the next 12 months, compared to those (29%) who think it will get worse
- The proportion of consumers rating the economy as good is at its highest since we started recording data. Just over one in ten (13%) now rate the economy as good, compared to 6% last year (July 2012)
- The proportion of consumers rating the economy as poor (59%) is at its lowest since we started recording data
- Although the majority (59%) still rate the UK economy as poor, this has dropped from 66% last month (June 2013) and 72% this time last year (July 2012).
But households are still feeling the squeeze
- Levels of concern over the cost of living remain high, with the top consumer worries remaining unchanged: fuel (81%); energy prices (79%) and food prices (73%)
- Nearly a third of consumers (31%) are still finding it difficult or very difficult on their current household income
- One in five (20%) consumers still feel insecure about their job security.
And this is affecting how consumers are behaving
- More than 1 in 3 (36%) consumers are now cutting back spending on essential household items (9.5 million households) compared to 25% last year (July 2012)
- 1 in 4 (28%) have dipped into savings to cover this month’s spending (7.4 million households) compared to 21% last month (June 2013) and 21% last year (July 2012)
- 1 in 5 (21%) have used an authorised overdraft facility in the last month (5.5 million households) compared to 16% last month (June 2013) and 17% last year (July 2012)
- 1 in 7 (14%) have borrowed money from family or friends (3.7 million households) compared to 11% last month (June 2013) and 10% last year (July 2012).
Consumers yet to start spending
Which? executive director Richard Lloyd said: ‘While this surge of optimism shows that consumers are feeling more positive about the future of the economy, it isn’t filtering through to how people feel about their own personal financial situation.
‘The recent heatwave and the arrival of a royal baby may have contributed to the public mood but there is still no let up for the millions of squeezed households who are struggling to get by.
‘Unless things improve we won’t see the all important rise in consumer spending that is so vital to the UK’s economic recovery.’