UK households spent 2% more on essentials in the last three months (December, January and February), according to the latest Lloyds Bank Spending Power Report.
Fuel spend has seen the sharpest immediate increase, up 16% in the three months, as a result of both people returning to offices and rising prices. For similar reasons, commuter transport spending increased 12%.
Energy spend the biggest financial concern for households
Energy spend, largely expected to follow suit in the coming months, increased 5% over the same period. With April’s price cap increase looming, home energy prices and the rising price of day to day items are the biggest everyday concerns for consumers, with more than 60% of those surveyed saying they had strong concerns about each of these.
Non-essential spending was also up 1% over the three months to February
Even with the majority of COVID-19 restrictions lifted, spending on some of the UK’s favourite pastimes – such as the cinema and sporting pursuits – grew just 3% over the period. Spending on clothes stayed flat, while home store spending dropped 12%.
The lifting of restrictions has provided pubs and restaurants with a boost after another difficult Christmas period, with spending up 5%. Payments to charities also increased 2%, despite the pressure households are beginning to feel.
Philip Robinson, PCA & Payments Managing Director Lloyds Bank, said: “Spending has crept up in the last three months and, alongside rising inflation and concerns around the cost of living, households will be starting to notice the impact on finances. While continued spend on things like cinema outings and sports suggests a level of resilience within budgets, the months ahead will likely see spending behaviour change as households take action to manage higher costs.”