Consumers in Scotland 2023

Introduction

In 2022 the UK experienced the largest increases in prices in forty years. After rising throughout the year, inflation peaked in October with the Consumer Prices Index increasing by 11.1%. The ONS estimate this is the highest rate since 1981.

Price rises have been particularly dramatic for essential products such as energy and food, and this has resulted in a prolonged cost of living crisis as household budgets have been brutally squeezed. Which?’s research has shown the major impact this is having for consumers across the UK, and in December 2022 we surveyed a nationallyrepresentative sample of consumers in Scotland in order to understand their specific experience of the cost of living crisis.

In this briefing we show the level of pressure that rising prices have placed on household budgets in Scotland and demonstrate the financial and emotional toll this is taking on people. We also explore how the economic environment is damaging consumer trust in the businesses they deal with.

Our key findings are:

• The cost of living dominates consumers’ concerns in Scotland. Worry about food and housing costs has increased significantly compared to last year, with worry about housing costs rising particularly sharply among mortgage holders.
• Financial difficulty is rising, with 56% of consumers in Scotland saying their household had to make an adjustment to cover essential spending in the last month. This compares to 48% last year and 37% the year before.
• Parents in particular are feeling the squeeze, being more likely to have made a financial adjustment or missed a payment than other types of households.
• Consumers in Scotland are suffering emotional and even physical harm from rising prices, with many reporting skipping meals or losing sleep over the cost of living.
• Rising prices are damaging trust in business, with trust in the energy, food, broadband and mobile sectors having dropped compared to last year. Trust in the energy sector is particularly low in Scotland versus the other nations.

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Food, energy, fuel and housing costs put pressure on households in Scotland

Inevitably, prices are the foremost worry for consumers in Scotland. Almost nine in ten consumers are worried about energy prices (89%), whilst concern around food and housing costs have increased sharply compared to the previous year.

The proportion of people worried about food prices increased by ten percentage points to 87% in December 2022, compared to 77% in 2021 and 63% in 2020. This is consumers in Scotland 2023 3 little surprise, with food inflation having hit 13.3% in December 2022 and Which?’s research showing particularly high increases of up to 30% for some groceries.

Meanwhile, the proportion worried about housing costs has also risen. Both mortgage holders and renters had high levels of worry about housing costs, at 76% and 75% respectively. Worry about housing costs among mortgage holders has historically been lower than among renters, but has caught up this year as mortgage holders deal with or anticipate higher interest rates. However, concern also varies across renters and is significantly higher among private renters (84%) than those renting from the council or a housing association.

Our calculations on the impact of inflation on household budgets in Scotland show why consumers are so concerned about price rises. Using ONS data on UK inflation and household spending in Scotland from 2019/20, we estimate that if consumers tried to maintain their same spending habits they would need to spend an additional £40 per week – or £2,080 a year – on food, energy and fuel in December 2022 compared with December 2021. That would mean 29% of their household expenditure would now be spent on just these essential goods, which is an increase of 5 percentage points compared to the previous year. 

Clearly, these are amounts beyond many households and as a result we have seen a large increase in the proportion of households who are making adjustments to cover essential spending. Nearly six in ten (56%) consumers in Scotland said that their household had made at least one adjustment to cover essential spending in the last month, up from 48% last year and 37% the year before.

By far the most common adjustment was cutting back on essentials (39%), and this increased from 25% in 2021. However, there has been no significant increase in the proportion of people making other kinds of adjustments to cover essential spending, such as dipping into savings or borrowing. This indicates that rather than take unsustainable financial actions to cope with higher prices, people have been more likely to go without.

The cost of living crisis is impacting some types of households more than others though and some are more likely to be making adjustments to cover essential spending. Nearly three-quarters (72%) of parents in Scotland surveyed had to make at least one of these adjustments, compared to just over a third (35%) of pensioners. 

The cost of living crisis is causing financial, emotional and potentially physical harm

The most obvious consequence of high inflation are elevated levels of financial difficulty. One in six (17%) consumers in Scotland said their household is finding it quite or very difficult to manage financially. A further third (31%) said they were just about getting by and just 13% said they are living comfortably.

Again, there is evidence that families with children are more likely to be struggling. Only 37% of working-age parents in Scotland say that they are living comfortably or doing alright, compared to 51% of non-parents of working age and 72% of pensioners.

This difference is reflected in who reported having missed a housing, bill or credit payment in the last month. Overall 5% of consumers in Scotland said they had missed a payment, but this increased to 10% among working-age parents. 

Financial pressures are causing widespread emotional harm. Nearly half (45%) of consumers in Scotland said that concerns around the cost of living have left them feeling anxious, whilst 31% have felt powerless and a quarter (23%) have felt overwhelmed. More than a fifth (22%) reported having trouble sleeping due to their concerns about the cost of living. 

Those who were struggling financially told us about the emotional impact this was having on them, with many describing sleepless nights and ongoing anxiety over their household finances.

“I’m having sleepless nights worrying what else is rising in price.” Male, 54

“It is majorly affecting my mental health as I’m anxious and worried all the time about how we’re going to manage to afford even the basics if this cost of living crisis continues.” Female, 57

“I’m severely depressed and worried all the time about being able to pay my bills and have enough money to feed and clothe my kids as well as electricity and gas to heat my home. It’s having a massive effect on my mental health, I feel anxious and stressed out all the time.” Female, 34

Financial pressures are also leading consumers in Scotland to engage in behaviours that could be potentially harmful to their physical health. Almost eight in ten (77%) of consumers in Scotland said they had been putting the heating on less due to energy consumers in scotland 2023 9 price rises, compared to just under half (46%) last year. 15% had been eating fewer cooked meals to save on energy costs, whilst one in ten (11%) had skipped meals due to rising food costs, 8% had prioritised providing meals for other family members and 2% had used a food bank. Parents were much more likely to have prioritised meals for other family members, at 22%.

“I’m heating the house to a maximum of 15 Degrees… Eating cold things like sandwiches etc. instead of using the cooker.” Female, 42

“We are having to skip meals, not having the heating on and not going out due to fuel costs.” Female, 55

Price rises are damaging trust in business

As consumers in Scotland struggle with the effects of price rises on their financial and emotional wellbeing, it is clear that this is damaging their perception of the businesses they deal with day-to-day for essential goods and services. Our data shows a substantial drop in trust in sectors providing essential services as prices rise.

The gas and electricity industry has had the largest loss of consumer trust over the past year. At the end of 2022, only 19% said they trust the sector and 53% said they do not, giving a net trust score of -34. This compares to +14 at the end of 2021. Although this loss in trust is seen across the UK, trust in the gas and electricity industry is significantly lower in Scotland compared with England (-23), Wales (-22) and Northern Ireland (-14).

The perception of businesses prioritising profits was a key driving factor among consumers in Scotland who do not trust the energy sector. Many respondents referred to large profits made by energy companies at a time when consumers are struggling to pay their bills.

“They are making too much of a profit and not helping those who have low income and extortionate fuel bills.” Female, 48

“Price hikes for customers while there is a cost of living crisis with people living in poverty, all the while these energy companies are making billions in profit.” Female, 24

“Making millions in profits, despite continually hiking prices.” Male, 35

Trust also dropped among providers of other essential services. Trust in broadband and mobile phone service providers fell sharply, while trust in Scottish Water was eight points lower this year.

The food/groceries sector has historically been an industry that enjoys high levels of consumer trust, but it dropped substantially in the last year. At the end of 2022, net trust had fallen to +32, compared to +61 seen at the end of 2021. Those who said they trust the food/groceries industry cited strong competition, strict food safety regulations and perceived attempts to limit rising costs as reasons why they trust the industry. Among those who said they don’t trust the sector, however, there was a perception of artificially inflated prices and discontent about so-called ‘shrinkflation’ (where item size or quantity is decreased whilst the price remains the same or increases).

“The prices of late have significantly increased well ahead of the inflation rate. More like 30% to inflation’s 10%. It’s hard to trust companies or have any thought they have my best interest at heart when they increase prices to those levels.” Male, 59

“They keep increasing their prices while reducing the product size, the way they are increasing egg and milk prices while the farmers are not seeing the profit passed on to them.” Male, 55

The crisis offers companies a chance to boost consumer trust by treating consumers fairly and offering them support when they most need it. Which?’s cost of living campaign is calling on businesses to do more to support consumers in these difficult economic times. We have identified a range of actions essential businesses can take to support consumers with specific calls for supermarkets, telecoms firms and energy companies.

Conclusion

Rising prices created a substantial economic shock throughout 2022 and our research clearly shows that consumers in Scotland have been severely impacted by this cost of living crisis. A majority of households are taking action to reduce their bills and cutting back on their spending, but some households are finding it more difficult than others, with families with children most likely to be struggling.

The harm from this crisis is manifesting itself in multiple ways. While some households are finding their financial situation is deteriorating and they are becoming more likely to miss payments, others are suffering emotional harm with financial worries causing anxiety.

However, while the impacts are already far-reaching, this is an ongoing crisis, with the Bank of England expecting that inflation will remain at very high levels at the beginning of 2023, and only fall to around 5% towards the end of 2023, still considerably higher than the target rate of 2% and the levels we have became accustomed to over recent decades. With such a prolonged crisis facing consumers in Scotland and across the UK, the already massive impacts on households will continue and likely increase, and consumers will need support from both government and business to protect their financial security and emotional and physical health.

Methodology

Yonder, on behalf of Which? conducted a survey of consumers in each of the UK nations from 25 November–6 December 2022. A minimum of 1,000 respondents were recruited for each of the four nations, with quotas and response weighting used to obtain a nationally representative sample for each nation according to their known adult age and gender profiles (updated this year using the ONS mid-2021 population estimates). Sample sizes and question text are noted below the relevant charts throughout the reports.

Quotes on trust in business are taken from responses from consumers in Scotland to our May 2022 and August 2022 Consumer Insight Tracker surveys.

We have included estimates of the proportional spend of consumers in Scotland on energy, fuel and food, as well as the increase in monetary terms. This is based on Which? Analysis of ONS data on household spending from the Living Costs and Food Survey (LCFS) combined with ONS data on inflation.