The Money Stats – August 2022 – Consumer Spending Patterns In Upheaval

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Soaring inflation, driven by the increasing costs of many of the most essential, day-to-day expenditure items for UK households, is causing significant shifts for consumer spending patterns, according to the August 2022 Money Statistics, produced by The Money Charity.

The cost of living crisis continues, with many more UK adults reporting that their everyday costs have increased and they are having to make tougher choices around which essentials they put their money towards. One recent survey found that 89% of the UK, or around 46 million people, reported an increase in their living costs. This compares to only 62% reporting the same back in November 2021.

In the year to July 2022, the CPI (Consumer Prices Index) increased by 10.1%, 0.7% higher than the year to June 2022, with the highest rates for housing, water, electricity, gas and other fuels (20.0%), transport (14.8%) and food and non-alcoholic beverages (12.6%). The impact of these high rates is closely reflected by what consumers are saying, with 94% of UK adults reporting an increase in the price of their food shop, 82% an increase in energy bills and 77% an increase in fuel. Citizen’s Advice are estimating that the next energy price cap review in October 2022 will leave 1 in 4 adults unable to pay their energy bills and 1 in 3 following the January 2023 review.

These significant rising bills are causing consumers to cut back on their more typical spending patterns. In Q1 2022, UK households spent £4.31 per household per day on water, electricity and gas, where in Q4 2021, this was £4.15. This relatively small increase for midwinter energy usage indicates that UK consumers were undoubtedly already experiencing steep cost increases, with many sacrificing energy use to prioritise other bills, such as food, rent etc. Similarly, the inflation on food prices has seen supermarket sales of their own-label value products increase by almost a fifth (19.7%), as consumers look in multiple directions in order to bring down the costs of their weekly outgoings.

Michelle Highman, Chief Executive of The Money Charity says: “Having a well-balanced, robust and thought-through budget is one of the key skills we engage people of all ages with through our Financial Wellbeing and Financial Education sessions. Looking honestly and carefully at your income and expenditure is a vital step in that process, but when prices grow rapidly and/or unpredictably, finding that all-important balance becomes a real challenge and a significant worry for many people.

“It is absolutely imperative that everything that can be done must be done to avoid the predicted numbers of people who will, effectively, be ‘priced out’ of affording energy. Inaction from government simply cannot happen and unfortunately, each measure already announced has quickly been outstripped and rendered obsolete by the increasing scale of the crisis. Politics and ideology need to be put aside and bold, far-reaching solutions embraced. Meanwhile, for anyone already finding themselves in difficulties, or seeing it coming, we’d urge them to seek out the many free advice and support sources available sooner, rather than later.”

Other Striking Numbers from the August Money Statistics:

  • 1 in 10 UK parents are expected to rely on foodbanks in the coming months. (P4.1.)
  • Net lending to individuals and housing associations in the UK grew by £224.6 million a day in June 2022. ()
  • 18% of people living in deprived areas report using credit, compared to 8% in the least deprived areas. The average proportion for all England is 13% (P4.1.)