KPMG study shows scale of household spending cutbacks, with eating out hit particularly hard.
More than half of UK consumers have cut back on discretional spending since the start of the year, with nearly two-thirds choosing to reduce the amount they spend on eating out, according to research from KPMG.
As households grapple with a swath of bill increases and tax hikes coming into effect from the start of this month, the survey of 3,000 consumers also found that 49% plan to spend less on non-essentials now that energy bill support payments have come to an end, while 30% will use their savings to cope.
The government’s energy bills support scheme provided a monthly discount of about £67 to households from October through to March, but that support will now become means-tested.
Telecoms providers have imposed above-inflation bill rises of up to 17% on many account holders from April. Of the people surveyed by KPMG, 51% said they would be paying more for their broadband from this month, while 49% said the same for their mobile plan.
So far this year, 55% of consumers have reduced their non-essential spending, the research showed, in particular on dining out (63%). The cost of utilities bills was cited as the main reason.
The cut in discretionary spending will be worrying to many shops, pubs and restaurants that are already struggling to recover from the economic hit of Covid. Small retail and hospitality businesses are already facing the threat of going bust from soaring gas and electricity costs, since the government severely trimmed its energy support at the weekend.
Of those surveyed, 36% had switched to cheaper retailers to save money, 37% had been buying more own-brand and value products in supermarkets, 33% were buying fewer items, and 11% said they were using credit more.
Of the consumers surveyed, who had on average £7,744 of savings, about a third (34%) said they were using savings this month to help meet their essential costs. Among those with savings, 41% said they had yet to buy any big-ticket items this year, and 34% said they would not do so over the rest of the year either.
Overall, the feeling of financial security so far this year was largely balanced among consumers: 25% felt more secure than when the year began, 29% felt less secure, and 45% felt the same as they did when the year began.