Glastonbury is in the air with both the record-breaking youngest ever headliner, Billie Eilish, and the oldest, Sir Paul McCartney, taking to the stage.
Festival goers have splashed the cash on tickets, transport and tents; all of which might paint a picture of positivity when it comes to the UK’s finances. The reality is much more off-key.
Consumer confidence is now at its lowest level for years as many face a cost-of-living crisis, with essentials such as food and fuel prices continuing to spiral.
GfK data confirms this. The data company’s monthly index which ‘checks the temperature’ of consumer confidence decreased by one point , to -41, in June and a record low.
The survey which has been running for over forty years, asks consumers how they feel about personal finances and the UK economy. Despite covering past periods of recession and hardship, today’s consumers say they are feeling financial pain like never before.
The festival-goers and holiday-makers superficially paint a different picture than that suggested by the GfK. After all, would a nation stricken with worry about the price of the weekly shop be packing out the terminals at Heathrow airport? Well, yes, certainly, if a lot of those trips were postponed due to the pandemic and many people are ready to reclaim their ‘freedom’; it is kind of a ‘last hurrah’.
Whilst there might be the odd rise and fall of costs, the economic reality for autumn looks challenging and makes the customary September ‘bump down to earth’ all the more unpleasant to deal with.
Energy bills are certain to rise with the October energy price-cap for UK customers likely to rise by over 50% (data from Cornwall Insight). This will have a shocking impact for households needing to turn up the thermostats as temperatures cool.
The pain doesn’t stop there as British food price inflation is on course to hit 20% by early 2023, according to predictions from U.S-based Citi bank.
One report has highlighted the opinion of some investors that Britain may well be at risk from the double-whammy of high inflation and impending recession. Reliance on imported energy and continued pain from Brexit could continue to impact trade with the European Union.
“With the economic outlook so unclear, no one knows how high inflation could go, and how long it will continue for – making fiscal and monetary policy judgements particularly tough,” highlighted Jack Leslie, a senior economist from the Resolution Foundation think-tank creators of the report.
As prices continue to rise faster than wages, consumer spending power will continue to be adversely affected. Some retailers are predicting a difficult autumn and winter with the exception of festivities over Christmas.
Therefore it is little surprise that Aldi is poised to overtake Morrisons as the UK’s fourth largest supermarket within a matter of months. Research company Kantar have made this prediction based on figures released earlier this month showing that the German discounter’s sales had risen by 7.9%, making its UK market-share 9% . Morrisons claimed just slightly more , a 9.6% market share.
Kantar and others all feel certain that the cost of living squeeze will drive more customers Aldi’s way.