Abacus Daily Debt News

Falling costs ‘may not boost consumer spending’

Inflation has been falling, but the British public still may not be encouraged to spend, it has been noted.

Charles Davis, an economist at the centre for economics and business research, said that although goods and services are getting cheaper, consumers are being affected by the recession and will remain subdued.

However, he stated that the falls in the cost of living may come as a "boon" to the UK population, particularly if people can manage to stay in employment.

"If you have a more steady income, like a civil servant for example, you will tend to benefit," Mr Davis revealed.

But he explained that this will not necessarily turn into a rise in spending, commenting: "You also have to factor in rising unemployment and uncertainty about the economic outlook."

The latest figures from the Office for National Statistics showed that consumer prices index annual inflation slowed from 2.9 per cent in March to 2.3 per cent in April.

Electricity and gas bills were a large downward pressure on the data, the organisation said.

By Jamie Price