DJS Research Ltd

As inflation in the UK rose to 10.4% in February, a recent survey conducted by DJS Research of more than 1600 UK citizens aged 16 years + (using our in-house panel, Opinion Exchange), revealed that more than four in ten households (42%) are greatly affected by the current cost of living crisis, with a further 55% stating they too are slightly or moderately affected.

We’ve all heard the old adage ‘we’re all in the same boat’ of course, but a closer look at the data shows that while we might all be living through the same storm, some boats are struggling with the inclement conditions better than others!

Millennials are most likely to report they are greatly affected by the cost of living crisis (54%) compared to other generations, while Baby Boomers and the Silent Generation are most likely to say they haven’t been affected at all (5% and 9% respectively). To continue with the weather analogy, Millennials face a perfect storm of lifestyle and fiscal factors which results in them being disproportionately affected by the current crisis. Inflation and rising living costs are outpacing wage growth for many, but Millennials who are also more likely to be experiencing higher student loan debts, higher housing costs (rent and mortgage payments) and lower levels of savings than previous generations, can have less flexibility in their disposable incomes to manage any additional expenditure pressures. This is coupled with the fact that Millennials (particularly at the upper end of the age range) are likely to have young children at home and are then faced with average costs for a full-time nursery place for a child under two of £14,836 per annum, up nearly 6% over the past year (according to a report by the charity Coram). Indeed, our survey also reveals both women (47%), and those with children under eighteen at home (51%), are also more likely to say they are greatly affected by the cost of living crisis.

When it comes to managing the impact of these increased costs, around two-thirds of citizens are cutting back on their heating (65%) and electricity consumption (65%) in a bid to lessen the impact of utility cost increases over the past year. A similar proportion are cutting back on eating out (63%) and more than half (55%) are ordering fewer takeaways, a figure which is higher still amongst Millennials (70% eating out less and 66% ordering fewer takeaways).

Retail is also being squeezed as consumers try to make savings; more than half (54%) are buying clothing and accessories less frequently and in grocery four in ten consumers (42%) are adding fewer items to their basket of goods and half are buying fewer branded food and drink items (53%), opting for cheaper own labels options. Personal care and beauty is also being cut back in an effort to make savings, with 40% spending less in this category. A third of consumers (34%) are also spending less on electronics and appliances at this time.

The arts too is affected, with 38% reducing the number of trips they make to the cinema and 30% going to fewer concerts.

And just as the travel sector starts to recover from the devastating impact of Covid-19, more than a third of consumers (37%) state they are taking fewer holidays and when booking a holiday a third (32%) are spending less on their break. Day trips/days out are similarly affected with 42% planning fewer trips and a similar proportion (39%) spending less on day’s out/visits.

Slightly more encouragingly perhaps, fitness and sport are comparatively less likely to be impacted quite so significantly with just 17% planning to cancel a gym/fitness membership and 20% spending less on sporting equipment.

Which of the following are you doing to help manage your household finances during the cost of living crisis? (Top ten).

With the cost of living crisis predicted to continue for at least the remainder of 2023 in the UK (according to Experian), consumers are facing a challenging year ahead. So, what are organisations doing to support their customers? Which? reports that Asda is running a ‘kids eat for £1’ offer that has no requirement to buy an adult meal at the same time, while over 60s can also get soup and a bread roll for £1. Sainsbury’s has ‘feed your family for a fiver’ advice, while Iceland is offering 10% off on Tuesdays for shoppers over 60 years of age and an interest free loan scheme to help families pay for groceries over the school holidays. Both Boots and John Lewis have launched value ranges, with Boots’ offering items priced at £1.50 or less and the John Lewis ANYDAY range now expanded beyond homeware into fashion and children’s fashion. Finally, Co-op has partnered with Your Local Pantry to support communities and expand the network from 75 to 225 pantries in the UK over the next three years, increasing the number of subscribers who are able to make up savings of up to £1000 a year on their groceries.

As consumers continue to face the uncertainties of the cost of living crisis, value for money will be key when making any spending decisions and it will be the organisations who are perceived to be supporting them through this cost of living crisis who are likely to be rewarded with their custom, and perhaps longer term their loyalty.

For more information, or to find out about conducting bespoke research in your consumer sector, please contact Gill Redfern, Research Director at gredfern@djsresearch.com