Consumers slash spending as winter of prices rises worries grow
Consumers have slashed spending as worries about winter of prices rises grow according to new research by AJ Bell.
The research found that 59% of people are already making cutbacks amid rising costs with a quarter of the poorest households think cutting back will keep their finances on track.
Rising energy bills and food costs are the biggest concerns with 58% having already reduced their food shopping.
Laura Suter, Head of Personal Finance at AJ Bell, said “As a winter of price rises and soaring costs looms, people are already trying to cut back on their spending. With today bringing an end to the Universal Credit uplift as well as headlines filled with price rises and stock shortages, many households are already worried about what the next few months will bring.”
“Three-fifths of people are worried about their finances already, with the same number having started making spending cutbacks. Most people have begun making cutbacks to luxuries (84%) such as eating out, trips and cosmetics. But almost three-quarters have cut back on their clothes spending, while worryingly 58% of people have already reduced their supermarket spend.”
“Only a quarter of the poorest households think that cutting back will actually keep their finances on track, showing how much some families are likely to struggle this winter. The biggest concerns for families are the rising energy prices and the rising cost of food in the supermarket, as we near winter and Christmas looms.”
“What’s more, many families are still feeling the effects of the pandemic on their finances, with a third of people saying they have less disposable income than before the pandemic. Women were much more likely to be worried about the current state of their finances and the impact rising costs will have, with 68% being concerned compared to 54% of men.”
“Lots of the big household costs people payout for each month have been rising and have further to go. Whether it’s soaring energy bills, which leaped last week and will rise again in April when the next price cap change happens, or rising food costs, which already saw their largest increase in more than a decade this summer and are expected to rise further, it’s clear that household bills are going to rise.”
“If you’re facing a fall in income or rising bills – or a toxic double whammy – then you need to get a grip on your finances and look at what you can afford. It’s not a particularly pleasant job but it’s essential to avoid getting into financial strife further down the line. You need to look at what you have coming in, after-tax, and then list all the stuff you’re spending in an average month. Once it’s laid out it’ll be clear whether you can afford rising prices, or if you need to make cutbacks.”