Feeling the cost-of-living

News that 86% of UK adults have seen an increase to the costs of living, opens up to reveal different textures of change for different audiences that marketers should be aware of.

Why it matters

While the effects of inflation are now being felt, it’s important to note that these figures were collected before the full impact of April hit (as a result of a lifted cap on energy bills which has sent prices rocketing 54% as well as a rise in national insurance). Future figures will be even worse.

As expected, it’s the poorest who will suffer the most. The lowest earners, also often renters, are hit hard.

Brands will, of course, need to adapt and fast. WARC’s recent coverage is here to guide you: from adapting how to think about long term customer value, to product strategy, to channel strategy.

What’s going on

That 9 in 10 respondents to a survey from the UK’s Office for National Statistics (ONS) report increases to their living costs is notable enough, but the problems identified go deeper.

• Twenty-three percent report that it was either difficult or very difficult to pay household bills relative to this time last year.
• Thirty percent report that they found it difficult to pay their mortgages or rent in the last month.
• Seventeen percent report borrowing/using credit more than last year.
• Forty-three percent believe they will not be able to save money in the next 12 months.

It is a similar B2B issue

A Federation of Small Business study also notes that 9 in 10 small businesses are feeling sharp increases in fuel and utility costs, but also from the national insurance and business rate rises.

Where it’s hitting

ONS figures point to these three common reasons:

• the price of food shopping (88%)
• gas or electricity bills (83%)
• the price of my fuel (77%)

It is also hitting different people in different ways. For instance, more renters (37%) are struggling to pay their bills compared to mortgagors (23%). These increases are also being felt very differently across different parts of the country

Sourced from the ONS, FT, WARC