The UK Government might finally be attempting to fill the £50bn black hole in the country’s finances but consumers are one step ahead and are already changing their spending habits to ensure they are able to cover rising utility bills this autumn and winter.
This comes as average spending on utility bills increased by 48% in September – higher than the growth seen in August (45.2%) and July (43.9% ) – with nine in 10 (91%) consumers feeling concerned about the impact of rising household bills on their personal finances.
That is according to Barclaycard’s monthly Consumer Spending Index, which combines the hundreds of millions of customer transactions recorded in September 2022 with consumer confidence data to provide an in-depth analysis of UK spending.
It reveals that to ensure they can afford rising households bills, 65% of Brits are finding ways to save energy at home. Of these, 67% are turning off lights when they leave the room, almost six in 10 (57%) are wearing more layers, and over half (54%) are boiling only as much water as they need, rather than a full kettle.
In September, spending on non-essential items grew just 1% year-on-year, significantly less than last month (3.6%), and a new low since February 2021 (-17.5%) when the second Covid-19 lockdown measures were still in place.
The report says this is likely due to the fact that almost a third (32%) say they are assessing whether every individual purchase is necessary amid the cost-of-living squeeze. Meanwhile, of the two thirds (67%) who are looking to reduce the cost of their weekly shop, 30% are only buying some items on a need-to-buy basis to save money and avoid waste.
Over half of all Brits (53%) are also planning to cut down on discretionary spending to be able to afford their energy bills this autumn and winter. Of these consumers, six in 10 (60%) are reducing the amount they eat out at restaurants, a similar proportion (59%) are cutting down on buying new clothes and accessories, and just under half (47%) are spending less on drinking in pubs, bars and nightclubs.
This perhaps explains why clothing retailers, after falling into decline in August (-1.9%), saw an even sharper drop in September (-4.1%). Restaurant spend (-12.2%) also fell further than the previous month (-11.4%), and bars, pubs and clubs slipped into the red (-0.4%) for the first time since March 2021.
To save money, over half of Brits (51%) are planning to spend more evenings at home over the coming months; opting to play board games (25%), stream films and box-sets (20%), and play video games (19%) instead of going out.
This, combined with the arrival of autumnal weather, perhaps explains why some “insperience” categories enjoyed a boost in September. Spend on takeaways and fast food saw its highest rise (10.1%) since March this year, while digital content and subscriptions, including gaming and sports streaming services, saw growth (1.6%) for the first time in eight months – possibly tied to new video game releases such as FIFA 23, or pre-orders for popular titles such as Call of Duty: Modern Warfare II.
Nearly two-fifths (38%) of Brits have also changed their banking or money management habits in response to the rising cost of living.
Of this group, 70% are checking their bank balances more often, 46% are checking their receipts more closely to keep an eye out for price increases, and 30% are keeping their paper receipts so they have a record of what they have spent.
Another popular technique used by four in 10 (39%) Brits is cutting back on regular in-person services. A third (32%) of this group have cancelled visits to the hairdresser, 23% have postponed window cleaning services, and 22% have cancelled a gym or sports club membership.
With the festive period fast approaching, four in 10 (39%) have already started putting money aside for Christmas, to ensure they have enough saved for gifts and get-togethers.
In addition, almost half of Brits (48%) are taking precautions due to concerns about products running out of stock earlier than usual, including stocking up on food with a long shelf-life and being more proactive with buying Christmas presents (both 21%). An ultra-cautious 6% have even pre-ordered their Christmas turkey already.
Even so, supermarket shopping only saw a small uplift (2.8%) compared to September 2021, as 67% of Brits say they are looking for ways to get more value from, or to reduce the cost of their weekly shop.
One of the most common ways for this money-conscious group to save is by cutting down on luxuries or one-off treats for themselves (40%). Similarly, one in five (19%) say that they are no longer able to afford small luxuries as a pick-me-up.
Three in ten workers (29%) are now taking a packed or home-made lunch into the office, instead of buying food on-the-go, while a similar proportion (28%) are cutting back on “treats” at work, such as coffees and snacks. One in eight (13%) are even skipping meals at work altogether.
In September, fuel spend saw its lowest growth (11.1%) since March 2021. This was likely due both to the recent decline in petrol and diesel prices, as well as the fact that many Brits are reducing car journeys to save money, with 14% currently choosing to work from home more often to save on travel.
A similar proportion (13%) of workers say they have started walking or cycling to work instead of driving due to rising fuel costs, and more than one in 10 (12%) have started to commute by public transport for the same reason.
Despite rising costs, animal-loving Brits continue to put their pets at the top of their list of priorities when it comes to personal spending. Of the half of consumers (51%) who own a pet, a third (33%) say they are spending the same amount on pets compared to last year and two in 10 (17%) say they are spending less on themselves so that they do not have to reduce spending on their animals.
Nevertheless, some pet owners are having to hold back on pet-related purchases as a result of rising prices, with 17% reducing their pets’ treat budget, and a similar proportion (18%) buying cheaper or discounted pet food for their furry friends.
Barclaycard director Esme Harwood said: “As the colder weather starts to set in and energy bills continue to rise, Brits are facing even tougher decisions about where they focus their spending. As a result, discretionary purchases like meals out and clothes have become less of a priority.
“However, Brits are still keen to have a good time while they save money, particularly when it comes to nights in. The increase in spending on digital content and takeaways in September reflects this, and could be a trend that continues into the festive period.
“Elsewhere, consumers continue to take a resourceful approach to money management – including putting aside money for Christmas – which will become even more important for weathering the unpredictable months ahead.”
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