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Consumer worries, confidence and financial wellbeing in November 2021

Summary

  • Concern around the cost of living continues to increase, with 79% now worried about energy prices, compared with 54% at the same time last year.

  • Despite these worries, measures of consumer confidence remained largely unchanged from last month, except for a modest increase in confidence in the future of the UK economy and a modest decrease in outlook on current household finances

  • Financial difficulty rates have not yet increased significantly, with a comparable missed payment rate to last month. However, this may change as we approach the costly period of Christmas and cold weather, with the added pressure of higher price increases than in previous years.

Concern about the cost of living continues to rise

The proportion of consumers who are concerned about the cost of living continues to rise. Worries about the prices of energy, fuel and food all increased sharply for a second consecutive quarter

The cost of energy is the most acute concern, with 79% of consumers saying they are worried about this. This is a major increase compared to the same time last year (54%), and is no surprise given the recent surges in wholesale gas prices which are driving up household energy bills. 

Whilst concern around energy prices is most common, the proportion of people worried about fuel and food prices is also increasing, reaching 72% and 70% respectively this month, at a time when inflation has topped 4%. Again, this is a major increase on the same time last year.

In October, we reported on the large proportion of consumers already impacted by increased bills and energy companies going bust. To understand how this is really affecting consumers, we asked members of our new Consumer Insights Panel, a panel of 36 consumers from a variety of backgrounds across the UK, to share their experiences of recent energy price increases. Some indicated that they were already seeing bills rise, and rationing consumption to offset the cost.

Confidence in the future economy increased this month, but other measures remained stable or fell

Although there is clear concern about prices among the majority of consumers, and some are already experiencing increases, there was an ambiguous change in consumer confidence this month. 

Reported confidence in the future of the economy actually increased a little this month. Nearly half (45%) of consumers said they thought the state of the economy would worsen over the next year, whilst 26% thought it would improve, giving a net confidence value of -19. Although still in the negative, this is an improvement on the -31 observed in October. Confidence in the future economy is now at a similar level to just before the pandemic, although it is considerably lower than the +26 seen just six months ago, when parts of the economy were re-opening after a winter of lockdowns.

Other measures of confidence, however, showed no such signs of improvement. Net confidence in current household situation has dropped compared to last month (+41 to +27), whilst confidence in future household situation remained just below the zero line (-6). 

Confidence in the current UK economy is collected quarterly and remained at the same level this month as in August (-32).

Whilst other sources have found an increase in confidence in November, our measures do not appear to support this, with only one of our measures (future economy) having seen a modest boost, one having dropped slightly, and the other remaining largely the same. This survey wave took place just before rules regarding facemasks and travel were changed in response to the Omicron variant, which may have itself already impacted on confidence.

Missed payment rates remained stable in November

Similar to confidence, financial difficulty levels do not yet appear to have been impacted significantly by increases in the cost of living. The missed payment rate remains fairly stable, at 6.6% this month. This is a slight, though not statistically significant, drop from last month’s 7.3%, but is higher than the same point last year (5.2%).

Last year, missed payment rates increased over Christmas and into the new year, so a higher starting point this November could be a cause for concern. Although we have not yet seen significant increases in financial difficulty among consumers, there is a risk that this will change as energy prices surge over winter and inflation in the prices of many other goods rises. The majority of consumers are worried about the prices of essentials, and are likely to feel intensifying effects of price increases as Christmas approaches and home energy use increases through winter.

Contact us

If you have any questions or would like to find out more, please email Sophie Beesley at consumerinsight@which.co.uk

Published on 3.12.21

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