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Consumers feel the pinch of rising prices

19/10/2021
RETIREMENT
  • People are now spending more and saving less than last quarter, as price increases cause outgoings to rise
  • 14.1m people are worried about rising prices of everyday items and 7.6m worry that their savings are being devalued by low interest rates and rising inflation
  • However, things are still better than during the pandemic. The number of people worried about losing their job has halved compared since this time last year

Research from pensions and retirement specialist LV= highlights how in September 2021 20% (10.7m) UK adults said they expect their finances to worsen over the next three months - but the figures remain much better than the lowpoint of December 2020 when 26% (13.7m) expected their finances to worsen.

The LV= Wealth and Wellbeing Monitor* - a quarterly survey of 4,000+ UK adults, shows:

  • Inflation fears rise: 27% (14.1m) are concerned about rising prices compared to 24% (12.5m) in June
  • Outgoings increase: 38% (19.9m) consumers say their outgoings have increased, and 19% (10.1m) say they are saving less. 
  • Job fears recede: 5% (2.8m) people say they are worried about losing their job compared to 12% (6.1m) in September 2020.
  • 26% (13.5m) UK adults said their finances worsened over the past three months - but the figures remain much better than the lowpoint of December 2020 when 36% (18.9m) said their finances had worsened. 
 
“With lockdown restrictions removed, the LV= Wealth and Wellbeing Monitor shows although consumer sentiment has deteriorated over the previous three months it remains much improved compared to the low point at the end of last year. We are in a period of adjustment as life slowly begins to return to normal after Covid and the reality of living in this new environment is beginning to bite.”
Clive BoltonManaging Director of Savings and Retirement at LV=

The LV= Wealth and Wellbeing Indices

LV= uses indices to track overall changes to spending, saving and finances. The indices are calculated by: subtracting the % who stated a negative change over the past three months (e.g. decrease/ worse) from the % who stated a positive change over the past three months (e.g. increase/ better), to work out the overall impact.
LV= Wealth & Wellbeing IndicesJun-20Sep-20Dec-20Mar-21Jun-21Sep-21Change QonQ
How finances have changed in last 3 months-18-18-25-9-8-11-2
How finances might look 3 months from now-6-8-14-2-1-5-5
Total monthly outgoings-92-16-11142612
Income from work-11-10-71682
Amount saving81-1102-1-3
Amount saving into pensions10-42341
Spend at the supermarket27211318162610
Spend on socialising-53-37-52-47-9615
The above data shows that there have been significant changes to some indices between June and September 2021.
  • Finances over past three months: The index measuring people’s finances over the past three months was -11 in Sept 2021. Slightly more people say their finances have got worse over the past three months compared to June 2021 when the index was -8. However this is still far better than the lowpoint of -25 in December 2021.
  • Financial outlook: The index measuring financial outlook for the next three months was slightly down at -5 in September 2021 compared to -1 in June 2021. However this is far better than  -14 in December 2020. A negative index means more people think their finance will worsen over the next three months compared to this who think it will improve.
  • Income and outgoings: The index measuring income has hit 8 – the highest level since the survey began. More people say their income from work has increased compare to those who say it has decreased. The index measuring outgoings also hit an all-time high of 26 with a lot more people (38%) saying their outgoings have increased compared to decreased (12%).
  • Savings index: The index measuring saving has fallen over the past 2 quarters to -1 in Sept 2021 from 2 in June 2021 and 10 in March 2021, indicating that people are spending more and saving less as lockdown restrictions disappear and people are able to go out and socialise.
  • Spending on socialising and at the supermarket: The index measuring spending on socialising has increased to 6 in Sept 2021 from -9 in June 2021 and -52 in December 2020. The index measuring spend at the supermarket has increased to 26 in Sept 2021, from 16 in June 2021 and 13 in December 2020.

“The Covid-19 pandemic has been incredibly difficult for the nation and had a huge impact on the lives, personal finances and mental health of millions of people. 

“The success of the vaccine programme, fall in death rates and easing of lockdown restrictions lifted spirits over summer and consumers are more optimistic than in the dark days of lockdown.

“We are living through a period of reassessment and adjustment as life begins to return to normal. As the threat from Covid begins to recede, people say they are spending more on socialising. Rather than worrying overwhelmingly about Covid and the effects of lockdown, people’s concerns are switching to more non-pandemic issues such as rising prices and how inflation is eroding their savings.”

Clive BoltonManaging Director of Savings and Retirement at LV=

Notes

* LV= surveyed 4,000+ nationally representative UK adults via an online omnibus conducted by Opinium in June 2020, September 2020, December 2020, March 2021, June  2021 and September 2021.

UK population stats from ONS. Total UK adult population is 52.7m UK adults (aged 18+).