Surging costs causing consumers to cut back on sustainable choices

Intrum’s annual European Consumer Payment Report (ECPR) has indicated a gloomy picture of consumers’ financial wellbeing and economic outlook. With rapidly increasing costs of living, consumers are cutting back on sustainable goods and services to manage their household finances.

The ECPR surveyed 24,000 European consumers on payment behaviour and the economic outlook, shows that record increases in the cost of living have set off a wave of bill-anxiety, forcing consumers to make difficult spending choices.

Two thirds of UK consumers (65 per cent) say they would like to buy more sustainable goods and services, but the rising cost of living makes it challenging for them to do so. Seven in 10 are changing how they spend money and 66 per cent say that, because of inflation and increasing costs, they now can’t pay a premium for sustainable products. Of those changing their spending behaviour, half say they plan to shop more in discount stores in the next year.

Other sectors likely to be affected by changing consumer spending patterns are not-for-profits and charities, with one in five of those changing their spending behaviour saying they will give less to charity in the next year.Seven in ten consumers say they have become increasingly aware of unnecessary costs. Consumers changing their behaviour are cutting back on meals out to compensate for rising prices, which is bad news for the hospitality sector and others that were starting to regain their footing after the impact of Covid.

Whilst four in ten are struggling to make ends meet and expect to default on a utility bill in the next 12 months. Three in ten have already missed a payment in the past year. Consumers who expect to miss bill payments in the next 12 months say they are most likely to default on e-commerce and online store bills.

Whilst more than half worry they won’t be able to retire comfortably (57%) and that they aren’t saving enough for the future (60%). This is up from 54% and 54% last year.

Unlike in recent years, older consumers are more likely to be affected (for example, 83% of Gen X say they are worse off than they were last year, compared with the UK average of 63%).

Vanessa Söderberg, Intrum’s Global Sustainability Director said “The cost-of-living crunch has understandably made struggling consumers look for discounts, leaving less scope to pay a premium for sustainable products. This can create additional challenges for governments, businesses and other organisations striving to keep sustainable consumption and the green transition at the top of the agenda.”

The ECPR findings show, however, that most UK consumers will still ‘punish’ companies that they believe to be prejudiced. Sixty per cent said they would stop spending money with a company if they believed it discriminated against consumers by racial or socioeconomic profiling.