85% of families think cost of living crisis will have a long-term negative impact on their future
The vast majority of families (85%) believe the cost of living crunch will have a long-term negative impact on their future.
A survey of 1,345 UK families from online parenting community Netmums also finds 71% think young families are being more negatively impacted by the rising cost of living than other generations.
It also finds many parents are feeling forced to make major sacrifices, with 43% of skipping meals so their children can eat and 30% only eating two meals per day. Other changes people are making to their eating habits to adjust to the current economic climate include smaller portion sizes (60%) and eating less meat (35%).
Shopping habits are also changing, with 65% saying they buy only essential food. Just under eight in 10 (78%) of those surveyed are also turning to second-hand clothes, with around two-thirds (66%) taking hand-me-downs from family and friends.
Healthcare and beauty appointments are also being cut, 72% of parents prepared to sacrifice regular dental checks and 79% having fewer haircuts.
In general, the consensus in the survey is that this economic crisis is more worrying than others in the past, with 87% of families saying the pressure on the family purse feels worse now than during other periods of financial uncertainty.
Shoppers will absorb 75% of price increases rather than cutting purchases
While 47% of consumers have made or are expecting to make cut backs in their general expenditure due to inflation this year, shoppers are also keen to avoid any drastic alteration to their current lifestyles, according Kantar.
In fact, shoppers will absorb 75% of price increases in grocery or fashion rather than avoid the purchase altogether, Kantar says.
Although figures are slightly skewed with lockdown comparisons, Kantar finds that consumers are buying less post-pandemic, saving 5.2% on their grocery bills, but are only saving 0.3% by shopping at cheaper stores.
People in the UK are feeling more negative about the economy than elsewhere in the world. While 34% of consumers feel negative globally, 43% feel so in the UK, driven primarily by the ongoing economic situation and its impact on finances.
The vast majority of people (78%) also aren’t expecting a pay rise in line with inflation, with 43% expecting no pay rise at all. Among women, only 17% are expecting a pay rise in line with or above inflation.
As such, the number of households feeling comfortable in their finances is rapidly falling, with many more facing difficulties. In November, 41% of households felt comfortable, 41% were managing and 17% were struggling. Now 34% are comfortable, 44% are managing and 22% are struggling.
But headline behaviour remains similar across all groups, Kantar’s data shows. Comfortable households are spending 2.8% less, shopping 1.7% less frequently, buying 8.3% less packs per trip, while paying 5.8% more in price per pack.
Almost nine in 10 consumers have taken action after seeing a product on Instagram
Some 87% of Instagram users say they have taken action after seeing a product on the site, such as following a brand, visiting its website or making a purchase online.
Research from SimplicityDX finds that users generally prefer to make purchases on a brand’s own site, rather than through social media. However, almost half (48%) agree social media is a “great place to discover new products”.
Meta has a strong position in social commerce, with three of the top four most widely used social media platforms (Facebook, WhatsApp and Instagram) owned by the company. But the report says that Meta’s position as a brand destination is often understated, with 63% of the Meta social commerce audience on Facebook Marketplace.
Facebook Marketplace is a destination for individual sellers, rather than brands. On the other hand, Meta’s Instagram Shopping feature is gaining momentum for brands, with 33% of consumers recalling Instagram as somewhere where they made a recent purchase.
TikTok is challenging Meta as a destination for social commerce. It has gained 20% of consumer recall in this survey and is level-pegging with Facebook Shops. TikTok has only added ecommerce capabilities in the last year, meaning it is quickly gathering momentum.
85% of UK consumers think brands should cut marketing spend to combat cost of living crisis
Almost nine in 10 consumers (85%) think brands should cut down on their marketing spend to combat rising costs, according to research from consumer insights platform Zappi.
Three-quarters of consumers also want to see brands reduce their profits to combat rising prices, while 67% believe CEOs, CMOs and CFOs should take pay cuts.
Consumers have high expectations of brands during the cost of living crisis, but the research suggests they also may be shopping less with brands. The vast majority (80%) who are responsible for children say they now rely on own brand products to make up more than half of their entire grocery shopping.
The research also finds nearly half of consumers (49%) now admit to seeking out “reduced price” sticker products, a fifth (20%) are travelling further to a cheaper supermarket, and over a third (34%) are changing supermarkets all together in a bid to make their cash go that little bit further.
UK economy shrunk by 0.1% between April and June
The UK economy shrunk by 0.1% in the second quarter of this year, according to estimates from the Office for National Statistics (ONS).
The shrinkage for June alone was even worse, with gross domestic product (GDP) falling by 0.6% during the month. However, the ONS says it is important to note the impact of the Queen’s Jubilee Bank Holiday, which led to one additional working day in May, and two less working days in June.
However, while the change to working days in June did affect the monthly estimate, the ONS says it likely had little impact on the overall quarterly figure. The first quarter of 2022 saw the economy grow by 0.8%.
The ONS says real household consumption decreased by 0.2%, which could be a sign that households are beginning to tighten their belts amid inflation. The Bank of England has already issued bleak predictions that the UK will enter recession in the last three months of this year, which is forecast to last over a year.
A recession is generally counted after two successive quarters of economic decline, meaning if this current quarter results in decline, then the UK will be in a recession.
The UK’s services sector slumped by 0.4% in Q2 2022, partly caused by the ceasing of some coronavirus related health activities, such as track and trace, says the ONS. However, it reports there were positive contributions from consumer-facing services, with travel agencies and tour operators doing particularly well.
Despite the shrinkage, the GDP figure reported today is actually better than economists had expected. The UK economy had been expected to decline by 0.2% last quarter.
Source: Office for National Statistics