How are consumers experiencing the cost of living crisis?

Summary

• Consumers continue to feel scared and angry with the cost of living crisis, with signs of this continuing into spring.
• Negativity and anxiety about affordability continue to place strains on households, particularly in the energy sector.
• Christmas saw an increased pessimism in households, with this alleviating slightly with spring bringing warmer weather.

Introduction

In the Cost of Living panel, we have observed households making various adjustments to cope with the price rises and pressures caused by the cost of living crisis. Throughout the past six months, we have closely tracked how these households have been affected by the crisis and the changes it has brought about in their financial attitudes and perspectives. This article highlights how attitudes have changed over the past six months towards household finances and different aspects of the crisis. 

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

Whilst households feel comfortable financially, December sees a dip in optimism

Throughout the six-month period, most households in our sample consistently felt financially comfortable. This aligns with previous research that households were able to cushion against any cost increases or found creative ways to cut costs. 

“I am quite creative with the household finances and I am confident in saving money without cutting back too much.”

Despite the majority feeling financially secure, there is a wide range of emotions reported by consumers ranging from confident and hopeful to embarrassed and anxious.

“Confident that my financial situation will be the same & not have big changes.”

“There just isn't enough money to survive.”

“Not enough money to pay bills and also warm the home and feed ourselves.”

“I'm hopeful as there is a pension price rise so there is a little more extra money to come in April but there is still uncertainty.”

December posed challenges for some of the households, as an increased number of consumers reported their finances were quite or very difficult compared to previous months.

The challenges of December are reflected in the diagram below with a clear pattern in consumers’ emotions. More and more households expressed feelings of powerlessness, being overwhelmed and anxious.

 During the Christmas period, many households cut back over the Christmas holidays and had smaller celebrations. People were still facing financial difficulties, adding strain to those who were already struggling. One household felt pressured to keep up with others.

“I continue to have less than enough to survive, and this was compounded by Christmas and not wanting my family to know how bad things are, so I needed to get enough presents to meet the family standard.”

Consumers are scared, anxious and pessimistic - a common reaction to the cost crisis

As we moved into the new year, some of the households started to feel more positive about their financial situation. This was not the case when households reflected on the Cost of Living crisis with most households describing being scared and angry since the start of the research. Many of the households describe feeling a sense of powerlessness and concerns about the crisis continuing. 

“I do worry that our finances will get worse the longer the cost of living crisis goes on.”

“The cost of living crisis is now covering all basics energy, food, fuel and if it continues to rise then we will struggle.”

“I can not do anything about the cost of living crisis.”

This pessimism continues when consumers think about their energy consumption

Households are holding strong emotions when it comes to how they feel about their energy provider and paying for energy. Many report feeling scared, powerless and angry - similar sentiments that we saw in previous research. 

“Having the heating on as and when necessary in certain rooms rather than the whole house and trying to think about how we can kind of wear extra layers, so that's probably been the most challenging thing about this month.”

“Powerless neatly sums up my concerns over the energy tariffs.”

“This is the big issue - we are constantly monitoring and logging our home heating - our oil bill is still high and this would be our biggest concern when we run out.”

We can see from the graph below, that even moving into the spring months, there are still significant concerns and feelings of anxiety and being out of control when dealing with energy costs.

Spring sees a glimmer of hope for people

For many Spring offers an element of hope with the prospect of warmer weather allowing them to feel more confident about dealing with continued high fuel prices.

“The warmer weather is coming and the fact that I am doing extra shifts in work will mean that I’m not home most evenings to consider putting the heating on.”

Family life also offers a glimmer of hope for people and consumers continue to report their family life positively. Consumers reported feeling happy, loved and grateful when thinking about their family life, a continuation of what has been reported in previous research.

“Grateful for an amazing family who makes me smile so much.”

“Just trying to think positive and exercise more and go on little walks with like a little family.”

“Grateful for a healthy family.”

Creativity by households cutting down the impact of food costs

Meanwhile, the ability to afford food shopping provides a very mixed picture. As we have seen within our last panel insight, the food sector is an area where consumers are most likely to feel a sense of control in cutting costs, with many households finding creative ways to limit the impact of inflation. 

“I am being more creative with my food shop, buying in bulk and buying supermarket-own brands in order to make my meals go longer.”

“I am confident that I can tweak meals to make them cost-effective - and I am lucky that my hubby is not too bothered about eating vegetarian which really reduced the food bill because the price of meat is high.” 

This sense of control has often led households to feel confident and hopeful when thinking about affording food. Despite this, there are a small number of households that feel concerned about their food shopping, with one or two even citing feeling embarrassed as they turn to cheaper brands to afford their shop.

“I am really sticking to a strict budget for food shopping but I am more anxious every time I go to the shops because I am struggling to stay within the budget.”

“Embarrassed that I’m buying cheaper brands to afford my food shop.”

Conclusion

Our research shows that the cost of living crisis is still causing consumers hardship emotionally from feeling scared to feeling angry. Households have been making adjustments across outgoings such as food and heating. However, when thinking forward there are concerns felt by some that there is little more they can do to continue to adjust to these continued increases. This only exacerbates people’s uncertainty about how they will cope and afford for the future.