Today, GWI, the leading audience insights company, has released its latest report showing the current impact of inflation and the hard choices that consumers in the UK are facing as the rising cost of living hits both lower and higher earners.
The data found that 62% of people in the UK are feeling a moderate or dramatic impact of inflation, with close to 90% saying the cost of living is more expensive than at the start of the year. Furthermore, with rumours of another recession on the way and inflation continuing to rise, 30% of consumers said their current personal or household financial situation isn’t secure, with 50% of people feeling somewhat financially secure.
For many, the COVID-19 pandemic meant significantly less spending, with more people reportedly putting money aside in savings and bank balances going up as a result. It’s possible that those who feel they are doing okay at the moment may be taking this into consideration when thinking about their personal finances. For them, the real crunch could be yet to come. Even so, 44% of people in the UK reported spending less compared to 2020. Notably, rising costs are being noticed by higher and lower earners alike with 34% of higher earners and 47% of people in lower wage brackets saying they’re cutting back on spending.
The data also shows a number of people making lifestyle changes to save money, including using less energy in the home (52%), walking and cycling more (44%), and preparing meals at home (41%).
Jason Mander, chief research officer at GWI, says: “Our data paints a wider trend of cutting back on costs amid the rising cost of living – which we can expect to be felt by more people as COVID-19 savings start to dwindle. Even though many may feel that they are not yet at a crunch point regarding finances, 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. Early casualties are luxury items and ‘treats’ such as nights out and takeaways but we’re already seeing concerns over the cost of what are for some, unavoidable purchases like fuel. It’s becoming increasingly crucial for companies to understand the daily choices that consumers are having to make.”
In light of the precarious position some UK consumers are finding themselves in, it isn’t surprising that people are cutting back on their spending. When asked what UK consumers are likely to spend less on, treats/luxuries, nights out or eating out and clothing are top of the list, whilst consumers are also increasingly conscious of essential purchases such as groceries and fuel, indicating the crisis is starting to bite.
Sustainability may also suffer due to the consumer dilemma. Even though 52% of consumers say they plan to be more careful with their energy usage and 44% plan to walk or cycle more—activities which have a positive effect on the planet—this is likely to be short-lived. In fact, despite the emphasis placed on sustainability and ethical business in recent years, the most important factor when contemplating a sustainable purchase may actually be cost.
When asked about the barriers to living a more environmentally-friendly lifestyle, the cost of eco-friendly alternatives came out on top (48%) as the main barrier to going green. Similarly, just a fifth of UK consumers said they buy sustainable clothing or plan to change to green energy providers, which could be down to the idea that they’re likely to cost more. As pressure mounts on people in the UK to stretch their budgets to cover increasing living costs, there’s no doubt that buying behaviour will continue to be impacted – we could see sustainability become a luxury rather than an ethical choice.
For further insights into how the UK is adapting to the cost of living crisis and the consumer dilemma, read the latest GWI report HERE.