Rising bills start to squeeze consumers

Consumers are feeling the pressure as a result of rising bills, with many pessimistic about their financial future, new research suggests.

The latest Consumer Barometer from Lloyds TSB Corporate Markets indicates that the gloom which has settled on the British economy is starting to be felt at all levels.

Canvassing the opinions of 2,000 consumers, the barometer shows that a record 87 per cent of respondents are expecting food, fuel and energy prices to continue rising.

Echoing official CPI data from the government which indicated that the rate of inflation will be 3.2 per cent next year, against 3.1 per cent now, consumers are expecting a tougher economic environment.

Trevor Williams, chief economist at Lloyds TSB Corporate Markets, said consumers were "clearly feeling the pressure of high prices".

"It is increasingly looking like interest rates are close to bottoming out in the next few months," he added, predicting that the UK would not see the "sharp interest rate cuts" that US consumers are benefiting from in the wake of aggressive actions on the other side of the Atlantic.

The base rate is currently at 5.25 per cent following a cut of 25 basis points last month.