British consumers have never felt so strapped for cash as rising utility bills leave little money left over for basic needs.
The proportion of British shoppers who feel they have no spare cash has reached an all-time high of 32% in the second quarter, according to the British Retail Consortium and Nielsen Consumer Confidence Survey.
Consumers listed utility bills as the number one concern, flowed closely by ‘the economy’ and rising fuel costs.
71% said they have changed their shopping habits as they try to save on household expenses, with 65% of those switching to cheaper grocery brands.
The overall index rose five points from the first quarter, to 72, as people feel “a little better” about job prospects and personal finances. However, the index remains down on all of last year.
BRC director general Stephen Robertson said: “The squeeze on disposable incomes is getting tighter. A third of people said they have no spare cash – a new record high.
“Weakness in the economy and rising utility, fuel and food bills top consumers’ concerns for the next 6 months. Even after paying out for essentials, households that do have spare cash are choosing to pay off debts and build-up savings rather than spend on the high street.
“With finances under pressure, consumers are becoming increasingly savvy, switching to cheaper grocery brands – often own-brand labels – to stay within their budgets. Competition within the sector is helping to take the edge off price inflation with a larger number of promotions and discounts on offer.
“Against this backdrop the small increase in consumer confidence is encouraging, but retailers won’t be expecting to benefit from it for some time yet. We’re unlikely to see a sustained rebound in consumer confidence until genuine signs of a strong economic recovery gather momentum.”
Nielsen managing director for UK & Ireland Chris Morley said: “Consumer confidence in Britain picked up in the last quarter.
“The extra bank holiday and warm spring provided a little light relief for shoppers and perhaps diverted thoughts away from the incessant squeeze on incomes, but sentiment is no higher than it was two years ago when the UK was in the grip of recession.
“We expect to see confidence boosted by a feel-good factor next year around the Olympic Games but until then - with price inflation running well ahead of any wage increases, renewed economic instability across Europe and a new round of utility bill hikes - it’s hard to see any improvement in mood being sustained.”