In the past times when the UK economy has been in trouble, the love affair between the Consumer and High Street spending has come to the rescue. Traditionally the high street has always bailed out the UK economy.
Today's economic problems mean that can't happen. No more easy credit means the UK consumer can not bail out the struggling economy by spending their way out of economic problems. A survey out today (11th Aug 2011) shows more than 60% of shoppers have switched to cheaper brands, while 32% claim that they are worrying about surging prices leaving them with no disposable income according to the British Retail Consortium's study.
BRC Director General, Stephen Robertson 'weakness in the economy and rising utility and food and fuel bills top consumers concerns for the next 6 months' he also warns that even after paying off essentials, households that do have spare cash are choosing to pay off debts rather than spend on the high street'
He also admitted that the difficult economic circumstances are forcing consumers to become more savvy.
Other factors affecting High Street spending are the worrying increases in inflation. Figures just out show the UK rate of inflation is back on an upward trend - reaching 4.4% in July, up from 4.2% in June - the latest figures show.
The real worrying thing is that in most parts of the country, many employers are struggling to keep all of their staff due to the rise in prices. This leads to many redundancies and force more and more people onto JSA and other forms of benefits, resulting in a deflation to many peoples day to day living allowance.
The ONS reported that no single component drove the increase in CPI inflation, with price increases seen in a number of different areas.
More expensive rent, particularly for those in social housing, was one such area that put pressure on Britons. Landlords are finding it increasingly harder to maintain suitable and sustainable living environments for their tenant's due to the rise in costs.
The cost of clothing, footwear, furniture and other goods usually falls in July amid summer discounting, but reductions weren't as big this year, the ONS said.
It added that higher charges for financial services - such as arranging a mortgage - had put an additional burden on consumers. The problem here is that this is a negative spiral which. Consumers spend less, prices drop and we are in a deflationary spiral.
As well as consumers watching what they spend, they are having to manage their finances better. There are so many more options available to consumers that their creditors would have them know.
Being well informed is really the key to making it through this difficult economic time. We all know that it is the creditors who are really feeling the squeeze. inflation in day to day living cost and deflation for most peoples wages making it harder for people to keep up with their repayments. Being pro-active is the key, getting in touch with the right people as soon as possible and creating an action plan is, in my opinion a sensible solution to getting out of debt.
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