What does 2023 have in store for consumers?

Summary

Which? research found: 

• The cost of living crisis dominated consumers’ reflections of 2022, with over half having to find ways to reduce the financial strain by cutting back and a few are even using loans, credit cards and overdrafts to help. 
• Looking ahead to 2023, the crisis, unsurprisingly, continues to take an emotional toll on households, but with uncertainty caused by price rises consumers are attempting to take back control by prioritising time with loved ones.

Introduction  

We have seen repeatedly in our research that the cost of living crisis has increasingly put a financial and emotional strain on households throughout 2022. In December 2022 we asked our Cost of Living Panel to reflect on 2022 and look ahead into 2023.

 2022 - the year of financial strains and cutbacks

With the financial outlook feeling bleak for many households, it is unsurprising that the cost of living crisis is prominent among consumers’ reflections of 2022. Our Cost of Living panel recounts the year as a time of limbo and of being careworn, how tightening the belt and clock-watching the smart meter has left them feeling exhausted emotionally. It’s been a prolonged time of stress and strain with no let-up.

“With the cost of living crisis, I am stressed a bit and constantly worrying about gas and electricity. Watching the smart meter and turning off the heating and sitting under a blanket in the evenings.”

“2022 has been a bit of a downer for me… It’s been tricky financially in this time of limbo in relation to the energy hikes and rising costs of food and petrol etc.”

“This year has been difficult due to the anxiety caused by rising bills and the cost of living crisis. I am really counting every penny and being a lot less carefree compared to what I was last year.”

Financial strains were felt across every part of daily life, but challenges around the price increases of energy bills were most prominently recalled for nearly all households. 

“Energy prices have started to rise and rise. Any spare cash I used to have each month is now taken up with my electric bill. I’m looking at £400 bill this month. This is a single person living on their own.”

To offset the financial strains and continued price hikes, consumers found ways to cut back on expenses where possible, doing less of what makes them happy and, in some cases, more of what makes them unhappy. This included deprioritising holidays or sacrificing family days out for longer working hours.

“We sold our static caravan as it was costing too much money.”

“This has caused less family holidays, less family days out, picking up extra shifts in work and not going to very many social events now compared to what I used to really enjoy.”

We saw for a small number of households that cutting back on holidays or days out wasn’t enough to relieve the financial strain. As a result, consumers were taking out forms of credit (e.g. loans, credit cards, overdrafts etc.) to support themselves.

“I’ve had to go into my overdraft for the first time, and now have lots of money troubles and worries.”

2023 - a bleak uncertainty for consumers

Entering the new year and the cost of living crisis continues to be front of mind for consumers for 2023. A large concern is the uncertainty of future price rises. Where will the rises end for phone and energy bills?

“I am worried about the cost of living crisis as there is no cap on the price increases therefore people like the energy companies and food companies can charge whatever they want.”

“I think financially we are better off than a lot of other people but I am not sure the grandchildren can sustain the cost of increased utility bills.”

Concerns that appeared in 2022 around how to cushion oneself from the relentless price increases and being cautious of non-essential spending, continue into the new year. However, for 2023 attitudes move beyond concern towards solutions.

“I’m really struggling with the cost of living crisis. Although we are ok financially at the moment I worry that with the debt I have and with prices on everything rising I won’t be able to manage. My main priority for next year is to reduce my debt.”

“Our finances are in dire straits, we were recently overpaid on my husband’s benefits, so we now have to start paying that back out of money we already can’t afford to live on.”

Consumers positively seek to regain control amidst the uncertainty

Whilst the burden of the crisis weighs heavily on households, there is an element of optimism with consumers focusing on what is within their control. Thoughts turn to what’s important in their lives - spending time with loved ones and living a healthy and balanced life, especially as consumers look forward to a ‘normal’ year without Covid restrictions. 

“Our main focus will be continuing to prioritise our family time and maintain a healthy work/life balance.”

“Looking forward to going on a summer holiday with my boys especially now that my youngest is walking so we can do even more stuff.”

Conclusion

Our research shows that 2022 was full of stress and hardship, with consumers questioning how to absorb cost increases and making stark cutbacks to leisure time. But with the turn of 2023 amidst the bleak and uncertain future of price rises, consumers seek to rebalance their lives and take time back for themselves and their family.