Consumer confidence and financial wellbeing in November 2022

Summary

• Financial difficulty remains high, with 7.9% of households missing a mortgage, rent, bill, loan or credit card payment in the last month and nearly six in 10 (57%) having made an adjustment to cover essential spending. 
• Consumer confidence has increased slightly compared to in October, but remains very low. 
• Despite a modest increase in confidence, worry about prices shows no signs of abating, with 90% worried about energy prices and 86% worried about food prices.
• The cost of living is set to dampen Christmas plans, as consumers look for ways to save money over the festive period.

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Financial difficulty levels remain high

Financial difficulty levels remain consistent with the high level seen in recent months,  with  7.9% saying that their household has missed a housing, bill, loan or credit card payment in the last month. This is in line with the proportion seen last month.

Just under six in ten (57%) households reported having made at least one adjustment to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month. Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing. This is a significant increase on the 46% seen this time last year, but lower than the 65% peak seen in September of this year. 

Consumer confidence increases modestly, but remains very low

Measures of consumer confidence looked more optimistic in November, but only compared to the very low levels seen in September and October. Confidence in the future of the economy remains highly negative. Just 12% of consumers think that their household financial situation will improve over the next 12 months, and 66% think their finances will worsen, giving a net confidence level of -54. Though higher than the -68 seen in September, it is a dramatic fall from the +26 seen just 18 months ago, in May 2021. 

Confidence in future household finances also remains firmly in the negative, at -35, though again, this is slightly higher than the low seen in September of -52. 

People’s confidence in their current household finances, which is nearly always more positive, is at +19. Though much higher than the measures looking at the future, this is low compared to historical observations of this measure, such as the +41 seen 18 months ago, in May 2021.

Confidence may have increased slightly in response to the relative increase in stability following formation of the new government with Rishi Sunak as Prime Minister, and the rallying of the pound in response to this. It is worth noting, however, that this survey was run the weekend before the new Chancellor’s autumn statement on 17th November. Confidence levels may since have changed in response, as consumers assess the impact of the prospect of higher energy bills, taxation changes and public spending on their household and the wider economy. 

Consumer concern about price rises remains extremely high

Though economic confidence has increased somewhat, there is little evidence of concern around price rises abating. Nine in ten (90%) of consumers are worried about energy prices, whilst 86% are worried about food prices, 84% about fuel prices and 66% about housing costs.  Each of these is very much in line with the very high levels seen in the last six months. 

In each case, the proportion worried has increased by more than ten percentage points compared to a year ago, in November 2021, with worry about food seeing the biggest increase of 16 percentage points. 

The cost of living is front of mind as Christmas approaches

Households across the country will be considering their Christmas plans carefully this year, as they cope with the impact of rising prices on their household finances, and prepare for inevitable further price increases into 2023. 

Just 8% of consumers told us that they plan to spend more on Christmas this year compared to last, whilst 46% said they plan to spend less. This is the case even though last year’s Christmas plans may have been dampened to some extent by the spread of the Omicron variant of coronavirus. 

Consumers cited the rising cost of living as the reason for reduced spending, with many simply lacking the funds to spend as much as last year.

"Due to the cost of living, I have not got as much left-over money to spend and will not use my little savings for presents etc."

"With the increase in prices on food and energy I just don’t have the same amount of money available that I had last year."

Many consumers told us that they have made a conscious decision as a household or wider family to spend less money this year. 

"I have less spare money this Christmas than I would normally have…I think most of my family and those I celebrate Christmas with are in the same boat as well so it's a bit of an agreement that Christmas this year will be quieter and less frivolous."

Though a small minority (8%) of consumers did say that they plan to spend more this year, this was in many cases driven by increases in prices, and not a conscious decision to splash out over the festive season.

"I’m spending more because the cost of everything has increased. From prices of items to postage.  I’m not buying any more than previous years either but still more expensive."

"Everything has gone up in price, so food/drinks and gifts will all cost more."

Many consumers plan to cut down on gift spending this Christmas

With many households looking to cut back on the expense of Christmas, gifts are one of the areas consumers plan to cut back on. Four in ten (41%) consumers told us that they plan to cut back by buying fewer gifts this year, whilst a third (33%) said they would buy cheaper gifts, and a quarter (26%) said they would take advantage of promotions or discounts to save money on gifts. 

The money saving tactics went beyond gift buying, with a quarter (30%) of consumers saying they would buy in cheaper or less food and drink to have at home over the Christmas period, and 23% said they would simply stay at home more to save money.