Studies released today by analysts Experian and uSwitch have painted a bleak picture for UK retailers, warning that not only is disposable income at its lowest point for ten years, but that signs are on the horizon that business failures may begin to rise if consumer spending is down at Christmas.
The combination of rising taxes, increases in utility bills and escalating rent as well as general inflation being on the up, have seen consumers wallets squeezed meaning that have less money to spend on luxury items.
According to uSwitch's personal finance expert, Mike Naylor: "Our pay cheques may be getting fatter, but the chunk that we have to hand over to pay taxes, bills and other living costs is growing even faster.
"We are working harder, but we are not getting any wealthier - we are just running to stand still."
According to the site, the cost of water, heating and rent have increased by an average of 33 per cent, 46 per cent and 44 per cent respective over the past decade.
Managing director of Experian's business information division warned that falling disposable incomes were yet to impact the economy, however, when they did there would be problems.
"Retailing, a key economic barometer, has shown a marginal improvement year-on-year," he added.
"However, the combination of warm weather over the August Bank Holiday hitting sales and shop visitor numbers and the five increases in the interest rate now starting to bite, it could be a difficult final quarter for retailers since a good performance in the run-up to Christmas plays a critical role in overall annual performance.
"These are difficult trading times for businesses with very mixed messages coming from the economy," he added.
"Insolvencies are continuing to fall, which is good news, but it's as yet unclear what the true impact of the uncertainties in the financial markets will be."