Consumer Pulse Q1 2022

The well-publicised challenge around the UK’s cost-of-living crisis became more evident in prevailing consumer sentiment at the beginning of 2022. Consumers who said they’re optimistic about household finances in the next 12 months declined to 39% from 48% in Q4‘21. UK consumers are confronted by a host of challenges: rising energy and fuel prices, increased rent and house prices, and higher food costs — amid lower incomes due to below-inflation wage growth and pending National Insurance increases.

When combined with the existing fragility of the economic and credit recovery toward prepandemic activity levels, the UK consumer is facing a perfect storm of circumstances — with 37% viewing their finances as ‘worse than planned,’ up from 31% in Q4’21.

While three in four consumers stated they’re moderately, very or extremely concerned about the current rate of inflation (similar to Q4‘21), it’s notable that those who are extremely concerned rose from 14% to 23%. This level of concern is evident across age groups, though Millennials (30%) and Gen X (27%) are more likely to be extremely concerned, possibly linked to the broader set of commitments these age groups have.

This concern is leading to action; 52% of consumers said they’re making changes to purchasing behaviour due to inflation which has risen from 39% in Q3’21. Again, it’s Millennials (68%) and Gen X (55%) where these changes are greatest.

Another high-profile trend continuing to dominate the headlines is the popularity of buy now, pay later (BNPL) offerings. Usage is relatively stable per previous studies, with 1 in 3 consumers stating they’ve used this service in the last 12 months, and 1 in 4 consumer having used BNPL more than twice in the past year. Familiarity with how this offering works is improving; only 7% said terms and conditions were difficult to understand or they didn’t read them compared to 11% in Q4’21.