According to KPMG research, more than half of UK consumers have cut back on discretionary spending since the beginning of the year, with nearly two-thirds choosing to reduce the amount they spend on dining out.
As households deal with a slew of bill increases and tax hikes that go into effect at the beginning of this month, a survey of 3,000 consumers found that 49% plan to spend less on non-essentials now that energy bill support payments have ended, while 30% will use their savings to cope.
From October to March, the government’s energy bills support program gave a monthly discount of about £67 to households, but that assistance will now be means-tested.
From April, telecom providers imposed above-inflation bill increases of up to 17% on many account users. 51% of those polled by KPMG said they would be paying more for broadband starting this month, while 49% said the same for their mobile service.
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According to the study, 55% of consumers have reduced their non-essential spending so far this year, particularly on dining out (63%). The primary reason given was the high cost of utility bills.
Many shops, pubs, and restaurants are already battling to recoup from the economic impact of Covid, so the reduction in discretionary spending will be concerning. Since the government drastically reduced its energy support over the weekend, small retail and hospitality companies are already facing the threat of bankruptcy due to soaring gas and electricity costs.
36% of those polled had moved to cheaper retailers to save money, 37% had purchased more own-brand and value products in supermarkets, 33% had purchased fewer items, and 11% had increased their use of credit.
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A third (34%) of the consumers polled, who had an average of £7,744 in savings, said they were using savings to help meet necessary expenses this month. Among those with savings, 41% had yet to purchase any large-ticket items this year, and 34% said they would not do so for the remainder of the year.
