The ongoing conflict in Ukraine is adding to the cost of living pressures for households, as commodity prices continue to be driven upwards, a new report by IGD has found.
IGD’s latest issue of Viewpoint: Conflict Compounds the Cost of Living Crisis, examines the threat inflation poses to the spending power of households in the UK, as well as further pressure expected in the forthcoming months.
The report can be downloaded here.
“The Ukraine conflict has accelerated inflation, which is being passed through to UK shoppers in the form of much higher living costs," commented Naomi Kissman, social impact director at IGD.
"For many, inflation is outstripping income and prosperity is declining. We believe that this economic phase has a long way to run – inflation may peak higher and last longer than official forecasts suggest."
Shopper Confidence Declines
Shopper confidence reached a new all-time low of -23 in March, according to IGD’s Shopper Confidence Index. With inflation reaching a 30 year high in April, some 90% of shoppers expect food prices to rise over the course of the next year, while 50% expect prices to get more expensive – this compares to just 12% in March 2021.
“Consumer confidence is very low and we also expect this to dip further in the coming months as shoppers come under increasing financial pressure," said Kissman.
"As the impact of rising national insurance, food and energy bills takes effect, we expect shoppers to increase their saving money focus.”
According to IGD, shoppers are likely to explore new ways to cut costs amidst the increased financial pressure, with 37% expecting to focus more on saving money this year (up from 14% that answered likewise in March). Just 10% of shoppers expect to purchase more higher quality items this year, down from 18% in March.
“Businesses will need to align their offer with changing shopper preferences," Kissman added. "Managing household budgets is set to become more difficult for a significant number of shoppers and they will be looking to business and government for help.”