Anxious times: behavioural and commercial studies sketch impact of inflation

Studies from across the UK and US reveal grim perceptions of people’s future prospects as the pandemic’s long-term effects continue to weigh on young people, and high levels of inflation hamper optimism.

Why it matters

Inflation is biting across the world – this has precipitated shifts in attitudes, behaviour, and spending. Some of the statistics point to desperation not only among the poorest but signs that a majority are feeling the pinch.

Find all of WARC’s reports and analysis on the economic situation at our hub on WARC Strategy.

Youth in crisis

A study from the Prince’s Trust charity in the UK looks at the ‘Class of Covid’ and finds that not only has the pandemic caused profound harm to young people’s prospects, but that the economic and political turbulence that has followed now weighs on them every day. Based on 2,002 respondents aged 16-25:

• 49% feel anxious about the future on a daily basis
• 51% feel their aspirations for the future are lower as a result of global events since 2020
• 51% agree that economic trouble makes them worry for job security
• 58% worry the cost-of-living crisis will prevent them from reaching their goals
• 35% feel their life is spiralling out of control

But perhaps the most worrying statistic is that over a third (35%) say their salary no longer covers their rent or mortgage.

A deeper set of problems

This chimes with the broader impact of the cost-of-living crisis on society, according to research from the Centre for Social Justice think tank shared at the Conservative Party conference this week.

It reports that some of the lowest income households end up paying a “poverty premium” – think pre-payment gas and electric meters that cost far more than direct debit systems – and that these people are often far more likely than the rest of society to look to gambling so they can make extra money and are slightly more likely to drink alcohol in order to cope.

Across the pond

Meanwhile, in the US, consumer research firm dunnhumby finds that Americans believe food inflation to be almost 10 points higher than it is in reality. Yet, this reflects a deeper issue: that people are living very precariously, even desperately.

• 64% of US consumers in the study would have difficulty covering an unexpected expense of $400 or more (up 4 percentage points since May).
• Elsewhere, hunger is increasing: 18% report not getting enough to eat, while 31% report skipping or reducing meals.

From a commercial lens, dunnhumby’s research shows a slight increase in dollar store use (up two points since May to 19.9%).

Trading down is now mainstream; 83% of respondents say they are looking for cheaper alternatives in at least one category. Top three trade-down categories are packaged food (53%), common household products (52%) and frozen food (42%).

Sourced from Prince’s Trust, dunnhumby, Centre for Social Justice (via Twitter)