How are consumers adjusting to the Cost of Living Crisis?

Key findings

• Behavioural changes in the supermarket sector have been the most prominent over the past 6 months with consumers moving from switching supermarkets to more extensive changes such as buying less fresh produce and buying own-brand products. 
• Whilst consumers have been making adjustments to limit the impact of energy rises, most have been sheltered from the full extent of these due to the combination of milder weather in the autumn and government support. 
• The most prominent sacrifice made by consumers is cutting social aspects of their lives. This became most apparent at Christmas with many downsizing celebrations with the theme continuing through to other family events. 
• Looking forward consumers are feeling uncertain, but the prospect of warmer weather offers some relief to energy bill concerns.

Introduction 

We’ve seen in our Consumer Insight tracker since the beginning of 2022, the proportion of consumers who have made at least one adjustment to cover essential spending has increased, with six in ten households making an adjustment in February 2023 compared to four in ten the previous year. In January 2023 we examined what these adjustments looked for households using our Cost of Living panel.  

You can access our complete library of data to understand the challenges facing consumers from our consumer data hub.

Adjustments were more common in the supermarket sector

The main area consumers have been cutting back or making changes to cut costs has been in the supermarket sector. This is potentially due to this being an area where the cost of living rises first started to have an impact. For many households within our panel changing to a ‘cheaper’ supermarkets in order to cut costs was a common first step. 

“Well we swapped to Lidl and Aldi, I think there is a noticeable difference”

“We shop at Aldi and Tesco, it works out a lot cheaper because we get the fruit and what we can from Aldi and then you can’t get everything so then, the remaining stuff, we’d go to Tesco.”

As financial strains continued, consumers made further changes including changing from fresh to frozen food, purchasing own brand items and batch-cooking.

“I’m definitely eating out less, and probably batch cooking a bit more, getting more frozen stuff.  I'm not getting fresh fruit and veg [anymore], I'm getting vegetables that I can put in the freezer"

“We’ve been using the supermarket brand stuff more compared to what we’d normally. Say you’d get Dolmio pasta sauce, we’d get the Tesco or Aldi version now.”

“I started trying to batch cook maybe cheaper chillis and things like that.”  

Consumers were aware of energy rises but were protected by government support.

This was slightly different within the energy sector, where awareness of rises hadn’t really taken effect until the Autumn. Whilst many consumers were aware of these upcoming rises e.g. the price cap in October, often letters and media exacerbated concerns and stress regarding these rises before they had impacted the household.

“I was getting a lot more emails becoming more conscious that it was about to become an issue. I hadn’t used electricity and gas much in the summer. We had a very good summer up here, I was actually really quite scared about when I was having to put the gas on.”

Whilst, there have been clear concerns regarding households’ ability to cope with continued price increases, a few consumers felt somewhat protected by the impact of energy rises due to the combination of milder weather in the autumn and government support. 

“I’m getting help from the government, which is really good for me at the moment.”

“Since the scheme started from October to March, the Government scheme has helped millions of households. So that’s a very great idea to help people, especially people who are on a low income and benefits.”

Despite many households not being fully impacted by the rises consumers are consciously thinking about ways to reduce their energy usage with some purchasing other forms of heating and cooking to cut costs.

“We were using [the boiler] for putting the heating on for an hour a night and for showers but we didn’t dare use it.”

“We have economised, not heating the whole house, heating the rooms we use and tending to be only two rooms in the house”

“I bought an air fryer so that we don’t have to put the oven on very often.”

“I’m sitting here with a blanket and a jumper, with a cat on my knee…. I’ve not put my heating on”

Consumers feel a lack of control in cutting down broadband costs

Although consumers have been making adjustments to cut down the impact of supermarket and energy price rises, the broadband sector is an area where consumers feel a lack of control. 

“I’ve not really done anything as of yet because I’m in a contract. I’m trying to get out of it but, obviously, it’s just a matter of waiting until then.”

Many households feel they are unable to cut costs until they are out of contract and then can look for a cheaper deal.  

“I actively contacted my provider to negotiate a reduced rate, which they offered quite quickly, which was quite pleasing.”

Less socialising, more saving?

The most prominent sacrifice made by consumers is cutting back on social aspects of their lives. Whilst this varies for households behaviours range from going out less with friends and family to reducing the number of takeaway meals.

“So we changed a lot of things like that, not going out as often, going out once at the weekend instead of going out three times. So stopped going out for lunches every day, the weekend and a Friday night dinner, just having it one date night.”

This is something which became more apparent during family celebrations and holiday periods (e.g. Christmas), as many had smaller celebrations and even stopped family traditions.

“My daughter’s birthday is just before [festivities], so we have to buy, obviously, two lots of presents for her but this time we just bought one. We gave her a card on her birthday and then just gave her the presents on Christmas, that’s what we did this time instead.”

“ We normally travel down south to see family. This year, we stayed here so it was smaller”  

For some households, there are signs this has started to take an emotional toll, especially when explaining changes to young children. This is set to continue throughout 2023, with households downsizing or stopping family occasions.

“I’ve had difficult conversations with my kids about why they can't have what they like and what we can afford. So that's a bit tricky.”

Adjustments are set to continue into spring and summer

Looking forward consumers are feeling uncertain, but the prospect of warmer weather offers some relief to energy bill concerns.

“Longer evenings, we’ll be outside more. Rather than watching TV in the evenings there now, we’ll be out in the garden playing and stuff, going for walks and that, so hopefully, yes, using less energy that way.”

Many households are set to continue changes seen within the previous year. However many have suggested that this year they will either not go away altogether or have smaller trips away. 

“ I just know that we would normally go on a big spring holiday and this year we’re not.”

Although for most there are still small areas to cut back, a few feel if prices continue to rise there is little room to continue to make adjustments.

Conclusion

Our research shows that households have been making a range of adjustments across different parts of their lives. However when thinking forward there are concerns felt by some that there is little they can do to continue to adjust to these continued increases which are exacerbated by the uncertainty.