Inflation Impact on Consumer Spending and Savings
- £65bn to be wiped off UK household finances due to cost of living crisis
- Real earnings not expected to grow until May 2024
- Average household to be £2,300 worse off by end of financial year
- 88% of consumers planning to cut spending until April 2024
- 54% have reduced discretionary purchases
- 69% searching for better deals and changing shopping habits
- Online shopping boost during pandemic deemed temporary
- Inflation not expected to return to 2% target until 2025
- Food and energy spending to remain higher than two years ago
A new report by Grant Thornton and Retail Economics reveals that the UK’s cost of living crisis is set to wipe £65bn from household finances, with real earnings not expected to grow until May 2024. The average household will be £2,300 worse off by the end of this financial year due to rising food and energy costs. As a result, 88% of UK consumers plan to cut back spending until April 2024, with 54% reducing discretionary purchases and 69% seeking better deals and changing shopping habits. The pandemic’s £54bn online shopping boost is deemed temporary. Inflation is not expected to return to the Bank of England’s 2% target until 2025, and food and energy spending will remain significantly higher than two years ago.
Factuality Level: 8
Factuality Justification: The article provides accurate information from a reputable source (Grant Thornton and Retail Economics) about the impact of inflation on UK households, including specific figures and consumer behavior changes. It also includes expert commentary from Nicola Sartori, head of Consumer at Grant Thornton UK. The article is based on a report with data and research, making it factual and informative.
Noise Level: 4
Noise Justification: The article provides relevant information about the impact of inflation and cost of living crisis on UK households, including specific figures and consumer behavior changes. It also includes insights from an expert in the field. However, it does not delve into long-term trends or possibilities, antifragility, accountability, intellectual honesty, staying on topic, evidence, actionable insights, or solutions.
Financial Relevance: Yes
Financial Markets Impacted: UK consumers, businesses, and the economy
Financial Rating Justification: The article discusses the impact of inflation and cost of living crisis on UK households’ finances, leading to changes in consumer behavior and affecting businesses. It also mentions the Bank of England’s 2% inflation target.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: There is no extreme event mentioned in the text, and the situation described is a financial crisis with moderate impact on household finances but not reaching severe or catastrophic levels.
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