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UK consumers are grappling with a stark new economic reality
Money & financeConsumer sentimentUnited Kingdom
The worries of UK consumers are laid bare in two new pieces of research that show consumer confidence hitting an all-time low for the second month in a row and almost one third of people fearing their personal or household financial situation isn’t secure.
The consumer mood is dark
A year ago, GfK’s long-running Consumer Confidence Index stood at -9; today it’s at -41. Joe Staton, Client Strategy Director at the market research company observed that “With prices rising faster than wages, and the prospect of strikes and spiralling inflation causing a summer of discontent, many will be surprised that the index has not dropped further”.
Spending is being cut
Inflation (as measured by the Consumer Prices Index) hit 9.1% in May, up from 5.5% in January. So it’s little surprise that data from audience insights company GWI shows 90% of UK consumers feel the cost of living is more expensive compared to six months ago.
A majority (62%) have felt a moderate/dramatic impact from inflation, while, more alarmingly, 30% say they are feeling insecure about their finances.
Rising costs are being noticed by higher and lower earners alike, GWI notes, with 34% of higher earners and 47% of people in lower wage brackets saying they’re cutting back on spending.
For some, that involves making lifestyle changes: 52% are using less energy in the home, 44% are walking and cycling more, 41% are preparing meals at home as eating out and takeaways are scrapped.
Why it matters
While everyone is conscious of the changing economic climate, many may feel that they are not yet at a crunch point regarding their own finances, says Jason Mander, Chief Research Officer at GWI. But “the consumer dilemma is starting to make itself known and there are choices being made throughout the purchase cycle, even for those who are feeling relatively comfortable”.
Brands need to monitor the situation closely as it develops and understand the daily choices that consumers are having to make.
“Britain faces a stark new economic reality and history shows that consumers will not hesitate to retrench and tighten their purse strings when the going gets tough” – Joe Staton, Client Strategy Director, GfK.