As the Government stimulus has come to an end this January, the consumers have become more cautious while spending money.

According to Nationwide Building Society, the purchase of houses and cars has dropped to 32%, this month, down from 35%, in December. This dip has turned the spending index down by 12 points, which normally increases, during January.

As predicted by Nationwide, the spending may have gone down due to consumers preferring to use their money to pay down debt rather than to making large purchases, following the festive season.

Martin Gahbauer, Nationwide's Chief Economist, said, "Heavy discounting on the high street and Government driven initiatives, such as lower VAT, the car scrappage scheme and the stamp duty holiday, combined to keep the spending index buoyant throughout 2009".

"The removal of these initiatives may now be causing consumers to reconsider parting with their cash at a time of year when we would normally expect to see high levels of spending confidence", he added.

Despite reducing their spending, consumers are beginning to feel more confident about the economy now; with one-third of them believing that the economy has improved a lot over last 6 months.