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Sixty-two percent of UK consumers are finding ways to reduce the cost of their weekly shopping, according to a new report from Barclays, which delves into shopper spending habits. Over half (53%) of consumers are also cutting down on luxuries or one-off treats for themselves, while a sizable proportion is planning meals in advance to avoid wasting food.
The report also revealed that Gen-Z consumers are spending more of their income on discretionary purchases compared to older age groups, including spending twice as much on takeaways.
Meanwhile, just one-third of Brits plan to participate in paid activities over the upcoming King’s Coronation bank holiday weekend in May, with only 8% planning nights out at bars and pubs.
Time to cut back?
The below-inflation rise in grocery spending shows that UK consumers are still trying their hardest to shave money off their weekly shop as energy bills continue to rise, explains Esme Harwood, director at Barclays.
“Cutbacks are also impacting restaurants, with many consumers even avoiding social plans that involve meals out,” she notes.
Meanwhile, Silvia Ardagna, head of European economics research at Barclays, says: “Inflation remains stubbornly high, with food and beverage prices up notably in February and driving the sharp acceleration in prices set by restaurants and hotels.”
“It is not surprising that consumers are moderating spending in these categories. But, with the decline in energy prices, we also expect a fast deceleration in food prices, which should support households’ consumption and allow the UK to experience just a mild recession in H1 23.”
Cost-of-living crunch
Consumer card spending grew just 4% year-on-year in March, less than half the latest Consumer Prices Index inflation rate of 9.2%, as consumers made further cutbacks to cope with the cost-of-living crunch.
Spending on groceries increased 7.1%, well below the latest Office of National Statistics food price inflation rate (18.2%), as 88% of shoppers say they are concerned about the impact of rising food prices on their household finances.
As cost concerns continue rising, Barclays revealed that 38% of consumers use vouchers to get money off their grocery bills.
Looking at individual categories, Gen-Z consumers spend twice as much (101% more) on fast food and takeaways as older consumers.
Spend on heating impacts eating
As rising household bills continue to bite, over half (54%) of consumers say they are cutting down on discretionary spending, especially eating out at restaurants (62%).
This comes as restaurants saw a noticeable dro of 5.6%.
Increasing costs are also having a broader impact on hospitality spending. Over a third (36%) are now cooking more at home instead of eating out, while a fifth (21%) are even avoiding social plans that involve eating out so they can save money.
Breaking the Bank (Holiday)
Looking ahead, just a third of UK consumers (35%) will spend on activities over the King’s Coronation Bank Holiday weekend in May, with one in 10 (11%) consumers planning to purchase food and drink for hosting friends or family and only 8% planning to spend money on drinks out at bars and pubs.
“Hospitality and leisure businesses will be hoping that the busy Bank Holiday period provides a boost to counteract consumers’ everyday cost-savings. While predictions for the Coronation weekend are lackluster, the results from Mother’s Day are more encouraging, demonstrating that Brits are still taking advantage of one-off moments to go out and celebrate,” adds Harwood.
The cost of living has been in the spotlight for months. FoodIngredientsFirst has been following the developments closely, reporting how the spike in global sugar prices and the shortages of fruits and vegetables has driven the UK to historical inflation rates.
The highest data points ever were recorded by the British Retail Consortium, which tracks food prices since 2005. It revealed that food inflation accelerated to 15% and 17% for the fresh food category.
Meanwhile, earlier this month, we reported that food prices continue to soar, displaying the volatile nature of foodstuffs. However, even the countries that have managed to rein in general prices are failing to keep food inflation at bay, signaling that food inflation has completely detached from the general inflation rate.
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