Consumer spending habits in the UK are undergoing a significant shift as the burden of rising energy bills continues to weigh heavily on households. A recent report from Barclaycard has shed light on the ways in which Britons are tightening their belts and making cutbacks in various areas in order to cope with the ongoing cost-of-living crisis. In September, average spending on utility bills surged by 48%, surpassing the growth seen in both August and July. This alarming increase has left 91% of consumers worried about the impact of mounting household bills on their personal finances.
To adapt to the increasing cost of energy, many consumers are making sacrifices in other aspects of their lives this autumn and winter. Discretionary spending, such as buying new clothes and dining out at restaurants, is taking a hit. In fact, more than half of consumers (53%) are planning to reduce their discretionary spending, while 59% are scaling back on purchasing new clothes, and 60% are cutting down on eating out. This change in spending priorities may also lead to a decreased urgency to buy new clothing items.
Moreover, the report reveals that spending on non-essential items only grew by 1% year-on-year in September, marking a substantial decline compared to the previous month and the lowest level since February 2021. This indicates that consumers are becoming increasingly cautious with their spending, particularly when it comes to luxury goods. Many are choosing to forgo indulgences and one-off treats, with one in five consumers admitting that they can no longer afford small luxuries as a pick-me-up.
Despite the economic challenges, many consumers are still prioritizing saving for the upcoming Christmas season. However, 48% of consumers are taking precautions due to concerns about products running out of stock earlier than usual, prompting them to be more proactive in purchasing Christmas presents.
In conclusion, the findings from Barclaycard’s report underscore the profound impact that rising energy bills are having on the spending habits of Britons. As the cost of living crisis looms large, consumers are making sacrifices and cutting back on discretionary expenses in order to navigate their financial circumstances. It is highly likely that this trend will persist as households confront the challenges posed by higher energy costs in the months ahead.
Useful links:
Money Advice Service
Citizens Advice
