Household spending ‘cautious’ in face of previous inflation shockspublished at 08:37 GMT
08:37 GMT
Michael Race
Business and economics reporter
You could be forgiven for being anxious by spikes in inflation in recent years. Prices surging in the aftermath of Covid and Russia’s invasion of Ukraine, for example, live long in the memory.
Wages have increased, on average, over time – but whether or not you feel better off will depend on your individual financial situation.
In a recent report, the Bank of England said across the country “concerns about rising food costs and utility bills still dominate conversations”.
“Households continue to change their shopping habits to reduce spending, such as buying more vegetables and reducing meat consumption,” it said.
I asked policymakers at the previous interest rate decision meeting if people were somewhat scarred by the inflation shocks, and that was having an impact on the wider economy – such as consumer spending and investment.
They confirmed it is something on their minds. And it is shown through their feedback around consumer spending remaining “cautious, focused on value”.
How people and businesses feel about their finances and what they expect to happen in the future can have a big impact on the economy and growth – the government’s main goal.