Half of UK consumers have cut back spending to cope with the cost of living crisis, although financial resilience appears robust, according to figures revealed in TransUnion’s latest Consumer Pulse study.
Over 50% of UK consumers surveyed indicated they’d reduced their expenditure in the last three months and intend to decrease it further as the year progresses.
Whilst all spend categories are impacted, consumers said they would significantly reduce their discretionary spending, such as dining out, travel and entertainment, as well as retail spend, covering things like clothing and electronics, in the next three months. This could have far-reaching implications for the retail sector and for consumers’ quality of life. Where spend cuts won’t suffice, some also plan to dip into savings to pay at least one of their current bills and loans in full.
“Our study has highlighted the concerted effort being made by UK consumers to cut back spending,” said Kelli Fielding, managing director of consumer interactive in the UK. “With continuing financial pressure amid the rising cost of living, it’s more important than ever that people remain diligent about their credit and put into practice healthy habits such as making payments on time, checking their credit information and keeping an eye on their credit score. This will help them stay in control of their financial wellbeing and help to ensure they can access finance if needed.”
Over the course of the last six months, consumers saw inflation soar, largely driven by the war in Ukraine and ongoing global shortages. Six in 10 (60%) UK consumers said inflation was the biggest concern affecting their household finances for the remainder of 2022, making it the biggest worry by far, followed by recession at 10%.
Despite the cost of living crisis, much of the population remains financially stable and more than able to weather the storm. More than half (53%) say their household finances are faring as planned or better, and the majority (73%) say they would be able to pay all their upcoming bills and credit commitments in full. Looking at income, eight out of 10 (80%) UK consumers have seen income either stay the same or increase over the past 12 months, and 29% expect to see it go up in the next year.
Gen Z consumers appear particularly resilient to the current financial pressures. Two in three (63%) young respondents said that they plan to take no action to cut back discretionary spending, with over a quarter (27%) planning on increasing their retail spending in the next three months.