Consumer confidence and financial wellbeing in June 2022
Financial difficulty remains at an elevated level, with 7.3% of households having missed a housing , bill, loan or credit card payment in the last month.
Nearly six in ten (58%) households had made an adjustment to cover essential spending, matching the high level seen in recent months.
Consumer confidence dropped, with confidence in future household finances and the UK economy dropping to -40 and -70 respectively.
Financial difficulty remains elevated
Financial difficulty levels appear to have stabilised at an elevated level, with 58% in June saying that their household has had to make adjustments to cover essential spending in the last month. Adjustments include cutting back on essentials, dipping into savings or borrowing. This is very similar to the 57% observed in May and 59% in April, but is much higher than the 40% seen just a year ago.
The missed payment rate has also remained at an elevated level, with 7.3% of households having missed a payment in the last month in June, compared to 7.1% in May and 7.3% in April. Missed payment rates also spiked in June of last year, so there is no year-on-year increase, although the general trend is upward.
Confidence dips amid pessimistic news about the UK economy
Confidence in future household finances and the future economy dropped this month, having shown tentative signs of recovery in April and May. Just 8% of consumers said they thought the UK economy would improve over the next 12 months, whilst 78% thought it would worsen, giving a net confidence of -70 compared to -47 in May. Confidence in future household finances had a drop of a similar magnitude to -40 in June compared to -28 in May.
This erases the tentative upturn in confidence seen over the last two months. The increase in pessimism is likely related to bad news about the economy, after a contraction in the UK economy as measured by the Office for National Statistics was reported on in the media in mid-June. Furthermore, many business leaders have raised fears of a recession, so it is unsurprising that consumers are feeling increasingly pessimistic amid gloomy predictions, as well as their own lived experience of price rises.
Confidence in current household finances remains flat at +21, similar to the level seen in April and May but considerably lower than the +45 seen a year ago.
Consumers across the board are feeling the pinch
Although those on lower incomes are most severely affected by the rising cost of living, consumers across ages, regions and income bands are feeling the effects. Consumers in households with a low income in the sample (up to £21,000) were more likely to have made adjustments to cover essential spending (64%), but this was still a majority in all income groups. More than half (57%) of consumers surveyed with a household income of over £55,000 had made at least one adjustment.
Consumers across income groups are also concerned about the future, with low confidence in future household situation consistent across all groups. Consumers at different income levels expressed concerns about increased prices, stagnant wages and the devaluing of savings.
Those on a pension are also concerned about the disparity between their income and the rapidity of price increases:
The fieldwork was conducted by Yonder on behalf of Which between 17th and 19th June 2022. A sample of 2,070 consumers was surveyed online and weighted to be nationally representative.
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Published on 07.07.22