Consumers in Wales 2023

Introduction

In 2022 the UK experienced the largest increases in prices in forty years. After rising throughout the year, inflation peaked in October with the Consumer Prices Index increasing by 11.1%. The ONS estimate this is the highest rate since 1981.

Price rises have been particularly dramatic for essential products such as energy and food, and this has resulted in a prolonged cost of living crisis as household budgets have been brutally squeezed. Which?’s research has shown the major impact this is having for consumers across the UK, and in December 2022 we surveyed a nationally-representative sample of consumers in Wales to to understand their specific experience of the cost of living crisis.

In this briefing we show the level of pressure that rising prices have placed on household budgets in Wales and demonstrate the financial and emotional toll this is taking on people. We also explore how the economic environment is damaging consumer trust in the businesses they deal with.

Our key findings are: 

• The cost of living dominates consumers’ concerns in Wales. Worry about energy, food and housing costs has increased significantly compared to last year. Worry about energy prices is higher in Wales (92%) than in England and Scotland. 
• Financial difficulty is rising, with 57% of consumers in Wales saying their household had to make an adjustment to cover essential spending in the last month. This compares to 44% last year and 37% the year before. 
• Parents in particular are feeling the squeeze, being more likely to have made a financial adjustment (71%) or missed a payment than other types of households. 
• Consumers in Wales are suffering emotional and even physical harm from rising prices, with many reporting skipping meals and just over a fifth (23%) losing sleep over the cost of living. 
• Rising prices are damaging trust in business, with trust in the energy, food, broadband and mobile sectors having dropped compared to last year. The energy sector had the lowest level of trust, at -22.

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You can access our complete library of data to understand the challenges facing consumers from our consumer data hub.

Food, energy, fuel and housing costs put pressure on households in Wales

Inevitably, prices are the foremost worry for consumers in Wales. More than nine in ten consumers are worried about energy prices (92%), an increase on last year and significantly more than in England and Scotland.

Concern around food prices has also increased sharply compared to the previous year. The proportion of people worried about food prices increased by 11 percentage points to 86% in December 2022, compared to 75% in 2021 and 58% in 2020. This is unsurprising, with food inflation having hit 13.3% in December 2022 and Which?’s research showing particularly high increases of up to 30% for some groceries. 

Meanwhile, the proportion worried about housing costs has also risen. Both mortgage holders and renters had high levels of worry about housing costs, at 73% and 78% respectively. Worry about housing costs has historically been lower among mortgage holders than renters, but this difference narrowed significantly this year as rising interest rates have sharply increased worry among mortgage holders. 

Our calculations on the impact of inflation on household budgets in Wales show why consumers are so concerned about price rises. Using ONS data on UK inflation and household spending in Wales from 2019/20, we estimate that if consumers tried to maintain their same spending habits they would need to spend an additional £38 per week – or over £1,975 a year – on food, energy and fuel in December 2022 compared with December 2021. That would mean 29% of their household expenditure would now be spent on just these essential goods, which is an increase of 5 percentage points compared to the previous year. 

Clearly, these are amounts beyond many households and as a result we have seen a large increase in the proportion of households who are making adjustments to cover essential spending. Nearly six in ten (57%) consumers in Wales said that their household had made at least one adjustment to cover essential spending in the last month, up from 44% last year and 37% the year before. 

By far the most common adjustment was cutting back on essentials (38%), and this increased from 25% in 2021. There has been a more modest increase of six percentage points in the proportion taking money out of savings. However, there has been no significant increase in the proportion of people making other kinds of adjustments to cover essential spending, such as borrowing. This indicates that rather than take unsustainable financial actions to cope with higher prices, people have been more likely to go without.

The cost of living crisis is impacting some types of households more than others though and some are more likely to be making adjustments to cover essential spending. Nearly three-quarters (71%) of parents in Wales surveyed had to make at least one of these adjustments, compared to less than half (45%) of pensioners. 

The cost of living crisis is causing financial, emotional and potentially physical harm

Elevated levels of financial difficulty are the most obvious consequence of high inflation. One in six (17%) consumers in Wales said their household is finding it quite or very difficult to manage financially. A further third (33%) said they were just about getting by and just 10% said they are living comfortably.

Again, there is evidence that families with children are more likely to be struggling. Only 32% of working-age parents in Wales say that they are living comfortably or doing alright, compared to 49% of non-parents of working age and 68% of pensioners.

This difference is reflected in who reported having missed a housing, bill or credit payment in the last month. Overall 6% of consumers in Wales said they had missed a payment, but this increased to 10% among working-age parents. 

Financial pressures are causing widespread emotional harm. Two-fifths (42%) of consumers in Wales said that concerns around the cost of living have left them feeling anxious, whilst 27% have felt powerless and a quarter (23%) have felt overwhelmed. More than a fifth (23%) reported having trouble sleeping due to their concerns about the cost of living. 

Those who were struggling financially told us about the emotional impact this was having on them, with many describing sleepless nights and ongoing anxiety over their household finances. 

“My stress and anxiety levels are high and I feel hopeless. I cannot do the things I wanted to do” Female, 43 

“It is very stressful, and can induce low moods and/or anxiety as a consequence.” Male, 34

 “I am constantly worried about our financial situation. I don't sleep at night because I don't know how we are going to manage.” Female, 50

Financial pressures are also leading consumers in Wales to engage in behaviours that could be potentially harmful to their physical health. Almost eight in ten (78%) of consumers in Wales said they had been putting the heating on less due to energy price rises, compared to just under half (48%) last year. 18% had been eating fewer cooked meals to save on energy costs, whilst one in ten (12%) had skipped meals due to rising food costs, 7% had prioritised providing meals for other family members and 3% had consumers in wales 2023 9 used a food bank. Parents were much more likely to have prioritised meals for other family members, at 18%. 

“We are having to choose between heating the home and eating food.” Female, 25 

“Having to sit in the cold as I can`t afford to put the heating on – I am skipping meals so others in the house don't have to.” Male, 62

 “We never have any money left for treats or savings by the end of the month, by the time we pay our monthly bills… there’s not much left after food shopping etc. and this is very worrying and therefore makes us all anxious, stressed and depressed so it's not a very pleasant atmosphere juggling the pennies to pay bills and deciding if we eat a warm meal or put the heating on” Female, 62

Price rises are damaging trust in business

As consumers in Wales struggle with the effects of price rises on their financial and emotional wellbeing, it is clear that this is damaging their perception of the businesses they deal with day-to-day for essential goods and services. Our data shows a substantial drop in trust in sectors providing essential services as prices rise. 

The gas and electricity industry has had the largest loss of consumer trust over the past year. At the end of 2022, only 23% said they trust the sector and 45% said they do not, giving a net trust score of -22. This compares to +18 at the end of 2021. This loss in trust is seen across all nations of the UK. The perception of prioritising profits was a key driving factor among consumers in Wales who do not trust the energy sector. Many respondents referred to large profits made by energy companies at a time when consumers are struggling to pay their bills.

“They continue to make record profits even as millions suffer a reduction in living standards brought on mainly by the prices of their "products.” Male, 46 

“They are coming across as extremely greedy in this current climate, raking in massive profits at the expense of the customers as they know it’s something we cannot do without. It’s abhorrent!” Female, 47 

“Energy bills have gone up massively and the companies don't seem to have taken any action to prevent this despite making huge profits.” Female, 31  

Trust also dropped among providers of other essential service providers. Trust in broadband and mobile phone service providers fell sharply, while trust in the water sector was 12 points lower this year. 

The food/groceries sector has historically been an industry that enjoys high levels of consumer trust, but it dropped substantially in the last year. At the end of 2022, net trust had fallen to +34, compared to +62 seen at the end of 2021. Those who said they trust the food/groceries industry cited strong competition and strict food safety regulations as reasons why they trust the industry. Among those who said they don’t trust the sector, however, there was a perception of artificially inflated prices and discontent about so-called ‘shrinkflation’ (where item size or quantity is decreased whilst the price remains the same or increases). 

“They are not doing enough to encourage healthy eating and occasionally seem to be price gouging or engaging in "shrinkflation" to boost profits at our expense.” Male, 38 

“Put prices up when really no need to in my eyes just getting greedy with profit margins.” Male, 46

The crisis offers companies a chance to boost consumer trust by treating consumers fairly and offering them support when they most need it. Which?’s cost of living campaign is calling on businesses to do more to support consumers in these difficult economic times. We have identified a range of actions essential businesses can take to support consumers with specific calls for supermarkets, telecoms firms and energy companies. 

Conclusion

Rising prices created a substantial economic shock throughout 2022 and our research clearly shows that consumers in Wales have been severely impacted by this cost of living crisis. A majority of households are taking action to reduce their bills and cutting back on their spending, but some households are finding it more difficult than others, with families with children most likely to be struggling.

The harm from this crisis is manifesting itself in multiple ways. While some households are finding their financial situation is deteriorating and they are becoming more likely to miss payments, others are suffering emotional harm with financial worries causing anxiety. 

However, while the impacts are already far-reaching, this is an ongoing crisis, with the Bank of England expecting that inflation will remain at very high levels at the beginning of 2023, and only fall to around 5% towards the end of 2023, still considerably higher than the target rate of 2% and the levels we have became accustomed to over recent decades. With such a prolonged crisis facing consumers in Wales and across the UK, the already massive impacts on households will continue and likely increase, and consumers will need support from both government and business to protect their financial security and emotional and physical health.  

Methodology

Yonder, on behalf of Which? conducted a survey of consumers in each of the UK nations from 25 November–6 December 2022. A minimum of 1,000 respondents were recruited for each of the four nations, with quotas and response weighting used to obtain a nationally representative sample for each nation according to their known adult age and gender profiles (updated this year using the ONS mid-2021 population estimates). Sample sizes and question text are noted below the relevant charts throughout the reports.

Quotes on trust in business are taken from responses from consumers in Wales to our May 2022 and August 2022 Consumer Insight Tracker surveys, which were conducted with nationally-representative samples of 2,000 UK respondents.  

We have included estimates of the proportional spend of consumers in Wales on energy, fuel and food, as well as the increase in monetary terms. This is based on Which? Analysis of ONS data on household spending from the Living Costs and Food Survey (LCFS) combined with ONS data on inflation.