Three quarters of consumers are set to cut their discretionary spending this winter to combat soaring costs associated with housing.

New data has found that 80% of consumers are concerned about the prospect of rising rents, mortgage rates, and household bills such as gas and electricity this winter, and will be looking to cut back on discretionary spending as a result. 

 

The prospect of continued price rises across the economy is the greatest concern among two thirds (65%) of households this winter. And going into next year, more than four in five (83%) are concerned about the impact of rising interest rates on finances, according to the latest Retail Economics-HyperJar Cost of Living Tracker.

With consumers looking to rein in spending this winter, 77% of respondents said they would cut back on eating out and holidays. However, more concerningly, 42% said they would be forced to spend less on energy and even food as they look to ride out the latest economic uncertainty. 

 

The biggest annual rise in food prices since 1980 has hit the least affluent the hardest, with less affluent households facing a 14% increase in food inflation and a 16% drop in their discretionary incomes versus the same period in 2021. 

Halloween’s £130m hit

Coming into retail’s crucial golden quarter, the cost-of-living crisis is also primed to hit seasonal spending. 

The data found 73% of Halloween shoppers are expected to reduce their spend on the event this year, compared with just 1.4% of consumers who expect to increase spending on the event.

 

Those cutting back on spending expect to do so by as much as 41%, which has led Retail Economics to predict that retailers can expect to see £130m less in spending this year compared with last. 

Costumes are set to face the greatest level of cutback, with more than a third (37%) of consumers expected to reduce spending on this category in 2022. This is followed by indoor decorations (33%), outdoor decorations (29%) and sweets (25%).

Retail Economics chief executive Richard Lim said: “Consumers are understandably nervous about the future and intend to take a grip of their finances by cutting back on non-essential purchases and reducing their energy consumption.

“But as worried households contemplate how they will make ends meet this winter, the political chaos that has unfolded over the last couple of weeks has only intensified their concerns.

“A series of mini-budget U-turns leaves consumers uncertain about the levels of support that will be in place next spring, which will only make for a more cautious outlook. Heading into the festive period, many shoppers will be constrained by the reality of tighter budgets, while softer levels of confidence will also dampen their Christmas spirits.”

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