Looming cost of living crisis pinches Brits’ confidence in finances
The spectre of inflation is acutely impacing Brits’ confidence in the health of their finances.
Nine in 10 households are worried about their finances, found research by Barclaycard.
Brits across the country are facing a severe cost of living crisis caused by soaring energy prices, wider inflation and looming tax hikes, which is weighing down optimism.
A shortage of lorry drivers has put a spanner in the UK’s logistics system, causing huge delays in food and petrol deliveries. Business leaders have warned consumers will have less choice of products at Christmas unless supply chain snarl ups unravel quickly.
Almost half of Brits have reportedly seen empty shelves, according to Barclaycard, while 18 per cent have found it tougher to get their hands on fruit and vegetables.
Raheel Ahmed, head of consumer products at Barclaycard, said: “Consumers are… starting to feel the impact of rising prices on their personal finances, which is also hampering confidence levels.”
According to the Office for National Statistics, inflation rose at its steepest monthly rate on an annual basis in August, rising to 3.2 per cent. The Bank of England meanwhile expects price rises to top four per cent by the end of the year.
The Old Lady’s new chief economist, Huw Pill, warned last week inflation is likely to be stickier and last for longer than the Bank initially forecast.
The size and length of the transitory inflation spike was “proving greater than expected,” he said.
A flurry of petrol panic buying amid fears scarce fuel supplies could leave Brits unable to drive their cars pushed consumer spending 13.3 per cent higher than last year.
Fuel spending rose at the fastest pace in two years.
Inflation erodes purchasing power, meaning people are worse off unless their wages rise at least the same rate of price rises.
In order to protect incomes, households are gravitating toward discount stores. This spending category registered a 29.3 per cent rise compared to 2019, Barclaycard said.
“As the festive season approaches, we expect spending to gradually gather pace as shoppers start buying gifts and preparing for gatherings with loved ones.”