Cost of living: an uncertain future for consumers
Consumer worry over the cost of living crisis and the price rises associated with this are more front of mind than other consumer issues such as sustainability.
Consumers fear the worst is yet to come with nearly six in ten already having to make adjustments to cover essential spending.
Cost of living crisis is hitting consumers hard
The latest update of our Which? Consumer Insight panel finds that consumers are starting to feel the pinch of the cost of living crisis, with many seeing price rises whilst their incomes remain static. People have observed these price increases in various sectors, with three-quarters of consumers (75%) reporting having been recently affected by increased food prices and seven in ten (72%) experiencing them within the energy sector in May 2022. These findings from the Which? Consumer Insight Tracker are also supported by our W? Consumer Insight Panel with participants experiencing increases in broadband, mobile, trade services, council tax and mortgages.
Rising prices over shadow other consumer issues
Even those who have not yet been affected by the rises are worried. In the Which? Consumer Insight Panel food prices are a particular worry, almost as much as energy price rises. Other consumer issues such as sustainability, housing safety issues and product safety received lower levels of concern.
Many of the price concerns seen within our panel are due to uncertainty about further price hikes including those within the energy sector. In addition people expect to see continued rises in interest rates affecting mortgage repayments and other bills such as council tax.
The worst is yet to come
There are concerns felt by most households - even those who are yet to be impacted by rises in bills - that the worst is yet to come, with many expressing a feeling of uncertainty around the energy price cap. Fixed energy tariffs continue to provide some households with protection, but these consumers are often concerned about what will happen when these tariffs end. This uncertainty makes it difficult for consumers to budget and plan for the future as they struggle to predict just how high prices will go.
This is concerning as consumers are already having to make financial adjustments, including cutting back, dipping into savings or borrowing.
More needs to be done to support consumers as the ‘at risk’ group is set to grow.
As the cost of living crisis continues there are an increased number of households losing their financial resilience. Our Which? consumer insight tracker shows a smaller but increasing proportion of consumers are under more severe financial pressure, with 7.1% of consumers saying that their household had missed a housing, bill, credit or loan payment in the last month in May. Within our panel two of our 35 households are in our ‘at risk group’ where they are experiencing significant financial pressure, with a third (12 households) in our ‘tipping group’ meaning their financial buffer is decreasing putting them at potential future financial risk. As household finances continue to be put under pressure there are concerns this ‘tipping group’ will grow and support is needed to ensure the most at risk are protected.
Which? Consumer Insight Tracker: Fieldwork is conducted by Yonder on behalf of Which each month. A sample of at least 2,000 consumers is surveyed online each wave and weighted to be nationally representative.
Which? Consumer Insight Panel: We also conducted in-depth interviews in January/February 2022 as part of our Which? Consumer Insight Panel, gathering qualitative insights on topics such as finance and cost of living. Our sample is made up of 35 members who were recruited to reflect a wide cross section of UK consumers.
If you have any questions or would like to find out more, please email Paige Johns at firstname.lastname@example.org