The number of people putting money aside for a rainy day fell in August but most consumers are optimistic about their ability to save more over the coming months, a new survey shows.
According to the latest Nationwide UK (Ireland)/ ESRI Savings Index, the proportion of people saving regularly decreased to 36 per cent last month, down 5 per cent from July but up from 30 per cent for August 2013.
Overall, the index, which measures overall sentiment towards saving, decreased to 97 in August, down five points versus the previous month. This was primarily due to a 15 point decline in the Savings Attitude index, one of two sub-indices that make-up the Savings Index. This index, which asks people about their saving behaviour and how they feel about the amount they save, decreased to 112 from 127 last month. However, it is still 11 points higher than a year ago.
The second index, the Savings Environment sub-index, which gauges opinion on economic conditions and the impact of government policy on saving, increased to 82 from 78 last month, but is 13 points lower than a year ago.
Despite the decline in sentiment last month, 80 per cent of people surveyed said they expect to maintain their current level of saving in six months’ time. A further 12 per cent said they believed they would be able to save more over the same period.
Moreover, the proportion of people who believe that now is a good time to save increased to 30 per cent last month, the highest level reported since May. The proportion who say that government policy encourages saving fell to 6 per cent however, which is the lowest figure recorded since January.
As many as 44 per cent of people surveyed about their use of spare cash said they would use any surplus to pay off debts, up 4 per centage points from July but unchanged from August 2013. A further 12 per cent said they would spend any excess cash, while 7 per cent would invest it.
"While this month's data shows a reversal of the recent improvement in attitudes towards saving, the underlying trend is still positive. Looking ahead over 90 per cent of people expect to be able to save the same or more than at present in six months' time," said Nationwide UK (Ireland)'s managing director Brendan Synnott.
“We are also seeing improvements in economic indicators with increases in household net worth, overall economic growth, increased numbers in employment and a reduction in numbers unemployed. This means that more people will have disposable income available and so will be in a position to choose between spending and saving,” he added.
