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Reports suggest two-thirds of consumers are planning to cut their spending in 2023. This is the result of ever-growing concern about the cost-of-living. Accountancy firm KPMG surveyed 3,000 people, finding that a whopping 61% of respondents said they were preparing to reduce their spending in the new year.
This, of course, is discretionary spending, and not spending on essentials such as food and bills. Such spending includes going out for dinner, holidays and other non-essentials. This poll highlights the pressure on both families and the wider economy as inflation remains high and wallets are squeezed.
Overall, 42% of respondents said they would reduce the amount they spend on clothes. 46% said they would reduce the frequency they eat out, and a further 42% said the same for takeaways.
The survey found that people were concerned over the cost of essentials and basics needed in everyday life. Costs such as food, energy, housing and fuel are deterrents for spending in other areas of life. In fact, one in 10 people surveyed highlighted their concern for energy bill prices after April 2023, when the government’s energy support scheme ends.
Households have already faced huge bill hikes, as well as food costs soaring and inflation sitting at over 10%. This has caused many to tighten their purse strings and put others into dire financial straits. In fact, official forecasts for the future of the economy show living wages will be reduced by 7% in real terms by the end of March 2024, destroying eight years of continuous growth.
The poll by KPMG also showed one in 10 adults have no savings, and just 4% of respondents said they would be able to increase their non-essential spending in the new year. One quarter of those polled said their non-essential spending would likely remain the same as in 2022.
The results of the survey also showed that a third of those surveyed said they would buy more own-brand and value products in 2023, and another third suggested they may buy fewer items altogether.
43% of those with savings said they were using them to meet everyday costs, rising to a staggering 80% amongst lower-income households. This further highlights the disproportionate impacts the cost-of-living crisis is having on those living on lower incomes.
“Current essential costs, fears of how high they’ll rise – including concerns about mortgage rate and energy price changes next year – are all factors in why two-thirds of consumers that we surveyed said they have to reduce their non-essential spending in 2023.
“To do so, consumers are increasingly changing how they shop to save money – including switching to cheaper retailers, buying more value or promotional produce, and swapping eating out for meals in. Understanding these swaps is critical for brands and retailers looking to still be the first choice for spend.”
Are you planning to cut spending in the new year? Let us know in the comments!
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