Report by Lloyds suggests pound’s steep fall since Brexit vote is raising import costs and leading to higher prices for consumers

This article is more than 3 years old

This article is more than 3 years old

Households are being left with less cash to spend on treats or to stash away as savings as the rising cost of essentials like food and fuel take a bigger chunk out of family budgets.

A new report on household finances from Lloyds bank echoed other signs that the pound’s steep fall since the Brexit vote is raising import costs for the UK and trickling through to higher prices for consumers.

Household spending on essentials rose at the fastest pace for almost three years in November – going up by 1% compared to a year ago – and the bank found consumers were growing increasingly worried about price pressures.

Birds Eye and Walkers ask supermarkets for up to 12% price rises Read more

Much of the pressure on household budgets last month came from higher petrol and diesel prices. Spending on fuel soared by 5.9% year-on-year – the biggest increase since February 2013. That pre-Christmas hit to family finances was in stark contrast to the same time last year when spending on fuel sank by 9.3%.

The Lloyds spending power report, which analysed current account data, also noted a relatively sharp rise in spending on food. That was up 1.6% on the year – the biggest increase in 20 months.

“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,” said Robin Bulloch, managing director at Lloyds.

The findings chime with official figures showing inflation picked up to a two-year high of 1.2% in November.



With the pound down more than 17% against the dollar since the Brexit vote, economists say UK companies will continue to face rising bills for imports such as food and fuel, as inflation climbs further in 2017.

Following high-profile pricing tussles between supermarkets and big brands such as Typhoo and Walkers, consumers are becoming more worried about inflation, according to surveys. Lloyds polled households to accompany its spending report and found that the percentage of people who have a negative view of inflation has risen by 11 percentage points over the last 12 months, to now stand at 49%.

When asked about the outlook for their disposable income, almost a third (31%) of people saw themselves having less money in 12 months’ time once all household bills and essentials are paid.