Consumers still feeling the squeeze despite falling inflation
New data from IPA TouchPoints shows easing inflation isn’t having an effect on a cost conscious consumer still feeling the cost-of-living squeeze.
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British consumers continue to be cost conscious despite falling inflation, as the effects of the cost-of-living crisis continue to hit them hard, according to IPA TouchPoints data.
The latest figures out today (11 July) paint a bleak picture of the nation’s finances with over a third of Brits (38%) admitting they aren’t coping on their current level of income. This is up marginally (1%) on last year, but is 17% higher than it was prior to lockdown and shows how entrenched the problem has become in UK households.
This squeeze on living standards has understandably led to consumers changing their shopping habits to mitigate the worst of the damage. IPA TouchPoints data reveals almost half of consumers (45.9%) are looking for money-off vouchers, a 10% increase on last year, with 55% of consumers saying they will gladly switch brands to make use of a coupon. That is up 52.9% year-on-year and up 18% from pre-lockdown.
The data shows this pattern extends to the supermarkets themselves. Consumers are continuing to use a range of supermarkets and shops for their weekly groceries, with 43.1% of shoppers admitting to doing so (up from 42.7% last year). This level is up on pre-lockdown levels in 2020, when it stood at 37.5%.
Grocery sales show sluggish growth despite normalising inflationA third of consumers (45.9%) check the comparative online price of a product in-store before they consider a purchase.
All this adds up to an increasingly cautious customer despite the fall in inflation in recent months. Inflation fell to its lowest level in three years in June to 2%, driven mainly by a fall in prices for food and soft drinks. However, crucially, food prices are still 25% higher than they were at the beginning of 2022.
For many, falling inflation is still not having an effect on how they feel about their bank balance at the end of the month. Interest rates have been held at 5.25% for the seventh consecutive time by the Bank of England, adding more pressures onto consumers.
“Inflation levels may have come down, but prices haven’t followed suit,” says Belinda Beeftink, director of media research at IPA.
“As the Bank of England says, most things still cost more than they did before. As we see from the data, many consumers are still struggling on their current income and as a result of the strain on their purse strings are having to make considered cost-based purchasing choices.”
According to Beeftink, a focus on value for money and rewarding loyalty may prove vital for brands in communicating with customers in these ongoing tough economic times.