Households cut back on beer, meat: report

UK households cut down purchases of beer and confectionery among other basic items since late 2021, claims a recent report based on analysis of official data that points to the impact of the cost-of-living crisis on consumption.

According to an analysis by Financial Times, UK households slashed purchases of beer by 15 per cent, confectionery by 10 per cent, meat by seven per cent, and bread and fruit by nine per cent each in the two years to the final quarter of 2023. The analysis is based on detailed consumer spending figures from the Office for National Statistics and gross domestic product data.

Consumers spent 15 per cent more over the two years to Q4 2023, the latest quarter for which data is available, although they bought 0.5 per cent fewer goods. Household spending on gas surged by almost 70 per cent, but consumers bought 10 per cent lower volumes. The volume of food purchased by consumers was also 8 per cent lower, even as spending on groceries increased by 16 per cent over the past two years.

“The cost of many essential items, such as energy and food, has risen dramatically in the past two years, and wages have not kept up with the large rise in prices. Given household budget constraints, something had to give,” the Financial Times quoted Tomasz Wieladek, chief European economist at investment company T Rowe Price, as saying.

As a result, he added, “households had to cut back on many non-essential items such as goods and luxury services”.

ONS data shows higher food and energy prices left little room for other purchases in the two years to the end of 2023: inflation-adjusted spending on personal care, which includes hairdressing and nail salons, dropped four per cent. Spending on recreation and culture also fell, including an 18 per cent decline for sports equipment and a five per cent drop for games and hobbies.

British households fared worse than others, official data suggests. In the US consumer real spending rose 10 per cent from pre-pandemic levels in the final three months of 2023, and Britain’s performance was weaker than that of the eurozone and Canada.