Nearly half of UK households plan spending cuts as prices spike
LONDON – Nearly half of British households plan to cut spending as worries around inflation escalate, a survey showed on Wednesday, driving home the squeeze on consumers from rising energy prices and the pound’s post-Brexit vote plunge.
Pension provider Scottish Friendly and the Social Market Foundation think tank said 46 percent of households plan to cut back on spending. More than half of this proportion cited the rising cost of living.
A separate survey from the British Retail Consortium (BRC) showed annual food price inflation more than doubled last month to 1.0 percent, the sharpest increase in prices since February 2014.
The surveys added to a raft of evidence that British consumers are feeling the strain of rising prices, exacerbated by the pound’s fall since June’s vote to leave the European Union.
Inflation hurts the poorest in particular because rising prices for essentials like food and transport take up a bigger share of their disposable income.
The Scottish Friendly survey showed 70 percent of British households were worried about the prospect of rising prices.
“They are expecting a bumpy ride thanks to the twin headwinds of Article 50 uncertainty and rising inflation and those households are proactively taking steps to ensure they are prepared for any outcome,” Scottish Friendly spokesman Calum Bennie said.
Despite rising food prices, overall shop prices are still falling but at a reduced rate, according to the BRC data. Total shop prices declined 0.8 percent after falling 1.0 percent in February, marking the weakest deflation since December 2013.
“Global food commodity costs have risen by 17 percent on average over last year’s figures, building substantial pressure in the food supply chain,” said Helen Dickinson, chief executive of the BRC. “The squeeze on household disposable incomes will tighten as the year progresses.”
Last week supermarket chain Asda said its gauge of disposable income showed the weakest growth since June 2014 during February, with the poorest households hit particularly hard.
A European Commission survey that dates back to the 1980s showed the largest proportion of British food and beverage retailers on record expect to raise prices in the next three months. The Scottish Friendly survey polled 2,000 Britons between Feb. 17 and Feb. 25. -Reuters