British consumers have been able to relax a bit after falling inflation and a boost in real wages helped build confidence.
People in the UK are now spending on average almost 1% less on basic items than they had to last year. Lower oil and energy prices have also eased pressure on struggling households.
Spending power is now at its highest level in four years.
With inflation predicted to hover around the zero mark for the coming months, those in work are likely to get their first increase in real pay since 2007.
A report from the EY ITEM Club says wages could grow by nearly 2% this year, up from 1.2% in 2014, and ending a seven-year pay squeeze for British employees.
Patrick Foley, chief economist at Lloyds Bank, said falling food and fuel prices should let households feel better off.
Four out of five people said that they had discretionary income after spending on essentials. Survey respondents said they would spend around 46%, put a quarter in savings, and use 14% to pay off debts.
The rise in employment was given as one of the most positive economic trends helping to boost consumer confidence. Now, unemployment in the UK is running at 5.7%, the lowest in six years.
