Although it was expected by economists and market experts, a report by Lloyds confirmed that everyday essentials have become costlier post Brexit. This sudden change was due to the steep fall in the value of the pound and increasing imported items.
Higher prices has become a big issue as consumers do not have enough cash to buy treats and other everyday items, says the report. Families are unable to make savings as a big chunk of their money goes into arranging food and fuel.
Moreover, the fall of the pound leads to an increase in the cost of imported items, which eventually costs the consumers. It was observed that household spending on essentials grew by 1% when compared to the previous year.
Banks also reported that the consumers were suffocated with the price pressure on them which also doubled by the increasing prices of diesel and petrol. It was recorded that fuel spending reached its highest peak by soaring 5.9% on a year-on-year basis from the time when it was last observed in February 2013.
This was in contrast to last year when the fuel spending got reduced by 9.3%. The Lloyd spending power report also suggested that there was a big increase in spending on food. This year, there was a 1.6% increase, the highest in last 20 months.
Robin Bulloch, managing director at Lloyds gave his view on the report by stating that “2016 has been a year of sustained growth in consumer outgoings, with the steady rise in expenditure on food and fuel driving a significant increase in overall essential spending.”
The official figures chimed with this statement and showed an inflation of 1.2% in November. UK economists also agree to the experts and suggest that inflation in food and fuel will continue in 2017 especially when there is a 17% fall in the pound when compared to dollar.
In fact, many surveys have revealed that consumers are worried about the inflation due to the high-contour pricing brawls between the most coveted super markets and the biggest brands in the UK market.
Lloyds also found that around 49% of people feel a negative impact of inflation and are concerned about the increasing prices of household items. In addition, around one-third of them suggested that they feel that there would be lesser money with them in a time span of a year especially after paying for household items and essentials.
To conclude, it is observed that prices of food and fuel items are soaring and would continue to do so in 2017. This can build an added pressure on the consumers and they may stop shopping for luxury items like treats and toys. This can have a huge impact on the market dynamics in the coming future.
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