22 million to cut back on heating and eating: IGD

Nearly 22 million are set to cut back on heating and eating in the next few months as energy price cap is set to rise by 80 percent in October, states a new research, highlighting how most Britons have reined in their spending while some are unable to cut back their spending further.  

According to IGD, 39 million people (75 percent) have reined in their spending in the last 2-3 months due to the cost of living crisis. Lowest income consumers have cut back more than those on higher incomes (80 percent vs 73 percent). This follows news last week that real wage levels are falling at record levels. 

The chart below makes for sobering reading. 35 million (67 percent) will have to cut back spending further to absorb the increase in the energy price cap. Only 16 percent will not need to cut back their spending to absorb the rise in the energy price cap. 

IGD further adds that six million (11 percent) consumers are facing severe economic hardship as they are unable to cut back their spending further. 

Lowest income consumers will need the most support. One in six (17 percent) of the lowest income consumers are unable to cut back their spending any further. There is also a regional divide with those in Scotland (16 percent) and the Midlands (15 percent) unable to cut back further compared to just 8 percent in the South East. 

More consumers are likely to find themselves needing to turn to food banks (5.8 million or 11 percent) or charity donations (5.2 million or 10 percent) for support in the next few months. 

Hardship is not limited to just those on the lowest incomes, as IGD points out that the group most likely to see the largest fall in living standards from energy price rises will be the “squeezed middle”. 

Around 1 in 10 of those on medium and higher incomes say that they are likely to need to use a foodbank (10 percent) and even rely on charity donations (9 percent). 

IGD has forecast that food inflation will reach 15 percent, with a +/- 1 percent margin of error, by the autumn. With inflation running far ahead of previous expectations, the financial and psychological impact on consumers is severe and volume food sales have contracted.