Ahead of this year’s party conference season, we reveal how consumers are feeling about the cost of living.
The Which? Consumer Insight Tracker, which monitors on a monthly basis how consumers are coping in the current financial climate, confirms that consumer confidence is up: 31% expect the economy to improve in the next year, up from 21% in September 2012.
But the cost of living remains one of the biggest concerns for consumers. Three quarters are worried about energy (79%), fuel (79%) and food prices (73%), which have remained high throughout the year. In addition, consumers are worried about the level of their savings (55%).
Savings used to pay for essentials
Overall, compared to a year ago, one million more households are now feeling under financial pressure. How people are spending their money has also changed too. Last year, people were most likely to use their savings to pay for a holiday. This year, holidays have fallen into fourth place with 3.5 million households using their savings to pay for essentials like food or household bills.
In a separate survey of MPs, we also found that their trust in different industries to act in consumers’ best interests was low in sectors that directly impact on the cost of living. 46% of MPs surveyed said they don’t trust the banking industry to act in the best interest of consumers with similar low levels of trust for energy companies (44%).
Times remain tough for consumers
Which? executive director Richard Lloyd said: ‘The cost of living is clearly top of the agenda for consumers. While people have started to become more optimistic, times remain tough with the price of essentials spiralling up and incomes stagnating. Expensive credit, not saving, is the fallback for many.
‘Politicians of all parties say they recognise the crisis of trust in essential services like banking and energy. They should now set out how they will redouble their efforts to reform failing markets so that prices are kept in check and unacceptable practices are stamped out. Giving more power back to consumers is good for business and for growth in the economy.’
Third of people struggling to live on their income
The Which? Consumer Insight tracker also found:
- A third of people (31%) are finding it difficult to live on their current income and 33% always or often run out of money at the end of each month
- Six in ten people describe the economy as poor and 29% believe it will get worse in the coming 12 months
- Two thirds (64%) believe the economy is hurting their own financial situation
- The car industry, banking and finance and energy are considered, by consumers, not to be trusted to act in their best interest
- Just one in four people (23%) trust the gas and electricity industry to act in their best interest
- Only 32% of consumers trust the banking sector to work in their best interests; only one in five (17%) trust the long-term financial products sector to act in their best interests.
Which? working for you in the run-up to the general election
Ahead of the general election Which? will be campaigning on:
- Banking reform – campaigning for a Big Change in banking culture. We want banks to put customers first, not sales.
- Energy – Affordable Energy Campaign calling for simple energy prices and reform of the energy market.
- Consumer Wellbeing – our Quarterly Consumer Report shows that people are struggling to pay for everyday essentials, and three quarters say the state of the economy is hurting their own financial situation. We will use this data to inform and direct the issues we work on and the solutions we recommend.
- Plan an effective budget – what to do if you spend more than you earn
- Ways to save on food – whether you’re eating in or dining out
- Pay off your debts – 10 top tips to dealing with debt