People spending less this summer despite falling inflation

People are cutting their spending this summer, as many continue to struggle with high living costs.  

Figures released today show clothing and footwear prices fell for the seventh consecutive month, as a result of low demand for these items.

While inflation eased recently, with the rate at which prices of food and household items are rising slowing down, energy bills and other essentials are still at an all-time high. This may explain why people are still reluctant to spend on non-essentials.

Bad weather keeping people indoors

During warmer months, shops usually welcome more people through their doors splashing the cash.

It’s likely that this summer’s disappointing weather has contributed to higher numbers opting to stay in rather than go out shopping.

This may also explain the decrease in credit card borrowing in June reported by the Bank of England.

Will interest rates fall?

Interest rates tell you how high the cost of borrowing is and how much you’ll be rewarded for saving. So a high interest rate means you’re charged more for borrowing money and paid a higher percentage on your savings. 

Since December 2021, the Bank of England has been increasing interest rates to try and lower inflation. Raising interest rates means people tend to borrow less and therefore spend less, which usually causes prices to rise less quickly, and inflation slows. They’ve been steady for a few months now.

This week, the Bank is expected to announce whether or not it will be lowering interest rates.

Experts are divided on whether rates will be cut now or if that’s more likely to happen in September.

Although the inflation level recently dropped to the Bank’s 2% target, energy and food prices are still volatile. On the other hand, when interest rates come down, people are more likely to borrow and, therefore, spend.

Do you need money help?

If you’ve had to scrimp on summer fun, we might be able to help you take control of your money.

We give free debt advice online or you can give us a ring. Whether you need budgeting help, advice on your benefit entitlement or information on debt solutions, we’re here for you.

All advice is free and impartial. Some debt solutions are also free, some have a fee.