Earners 'better off' by end of year
May 29 2012
There is "light at the end of the tunnel" for hard-pressed families following five "torrid" years, a key forecasting group has said.
The average earner will see their finances bolstered by an additional £482 this year and £624 in 2013, according to a special report on consumer spending by the Ernst & Young ITEM Club.
Provided oil prices continue to ease, inflation is likely to move back towards the Government's 2% target by the end of the year, from its current level of 3%, bringing prices into line with wages, the ITEM Club said.
Andrew Goodwin, senior economic adviser to the Ernst & Young ITEM Club, said: "After the tightest squeeze on consumer incomes in a generation, the worst is now behind us and most people should start to feel a bit better off by the end of the year."
Wage growth will finally begin to outpace inflation, while pay packets will also be boosted by the tax changes announced in the Budget, the ITEM Club said.
Spending growth is forecast at 0.8% this year and 1.1% in 2013, but the ITEM Club warned that high streets will still see a slow recovery as consumers pay down debt.
Mr Goodwin added: "It's an improving outlook for the UK high street but it's going to be a slow and steady recovery. Rather than splashing their cash, we're expecting to see conscientious consumers keeping a relatively firm grip on their purse strings."
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