Household finances hit record lows, shows YouGov research

The cost of living crisis has not shown any sign of slowing its dire effects on consumer purchasing power, with new YouGov data posting record lows for household finances.

The index used to measure consumer confidence has again dipped -1% to reach another all-time low, according to the Centre for Economics and Business Research which commissioned YouGov.

With news that the UK economy shrank in March by 0.1% and that quarterly growth slowed to 0.8%, the Bank of England is again warning of further interest rate rises beyond the 1% marker laid down last week. This is in a bid to try to bring down inflation that appears to be on course for 10%, according to the CPI forecasts.

Short-term household finance measures dropped by 6 points and the 12-month forward outlook reached a new record low, down from 49.1 to 48.3 in the data.

Darren Yaxley, head of reputation research at YouGov, said: “With the cost-of-living crisis continuing to rumble on, this data suggests that, perhaps unsurprisingly, consumers’ household finances are bearing the brunt.

“While the overall Consumer Confidence Index has fallen – a 1pt drop since March, but a 7.6pt fall since this time last year – our retrospective household finance measure has seen a similar drop over the course of just one month, with the April figure down 6pts since March and a massive 57pts since April 2021.”

In currency, the pound is now at a two-year low against the US Dollar, moving below $1.22 for the first time since the summer of 2020. Meanwhile, the decline against the Euro – now at €1.16 to £1 – is a seven month low. Political uncertainty is blamed for the UK’s slow growth, now said to be the slowest in the G7.

On jobs, there is a general trend of businesses struggling to both hire and retain staff with people looking for higher wage opportunities. According to the YouGov data, job security metrics were stagnant (+0.6%) for the past 30 days with an outlook for the next 12 months down 0.5%.

Yaxley added: “Other metrics such as house value, job security and business activity remain stable for the time being, but it remains to be seen whether these will experience a similar freefall as the country continues to feel the squeeze.”

The motor industry is said to be a key casualty of consumer cutbacks, with new registrations down 16% in April. This is largely attributed to the continued semi-conductor shortage and further supply chain struggles since Russia’s invasion of Ukraine, but a rising fuel price is also a turn off for consumers. Second hand electric car sales are selling at a rate of more than double last year, however.

Will cycling pick up the slack as people tighten their belts on transport costs? History gives reason to be hopeful, however CI.N’s market report had 44% of bike shops stating at the start of 2022 that they had noticed price increases and slowed their spending on cycling goods and services. That report is available to purchase by emailing us here.