UK's poorest households forced to cut spending on food as incomes decline - YAHOO FINANCE
British households are limiting the amount of money they spend on food purchases as households are worried that their budgets will be impacted by October’s energy cap rise after incomes fall.
Analysis from economic research firm Retail Economics and digital tech wallet HyperJar found 63.4% of households are setting strict limits on their food shopping spend as a result of rising living costs.
The tracker also found more people plan to do so in the coming months, with 29.6% expecting to also set spending limits if living costs continue to rise.
A mix of high inflation and greater work-related expenses, as COVID restrictions lift, has seen discretionary income come under pressure compared to last year.
After paying for all essentials, four in five UK households are facing double-digit declines in cash available for non-essentials compared to 2021.
Research showed the fastest price rises in 40 years are already hitting the poorest households the hardest as they face double-digit rises in inflation as they spend a disproportionate amount of their income on food and fuel.
This saw spare cash for non-essentials in the least affluent households fall by 15.6%, or £77, in June compared to the same time a year earlier.
Middle income households saw their spare cash plunge by 12.1% compared with last year, leaving them with £135 less to spend on non-essential items — amounting to a cumulative £3.9bn loss across the entire country.
Meanwhile, the rate of decline among the richest Britons remained broadly the same as last month, with stronger earnings growth and lower rates of inflation seeing discretionary income fall by 3.2% in June.
The report suggests major grocers including Asda have seen consumers set payment limits at checkout in order to manage their finances.
Concerns about energy price rises have also surged over the past month, with 94.4% worried that their personal finances will be impacted by a further energy cap rise in October, up from 91.6% in June.
Three-quarters of respondents are set to cut back spending on takeaways, as over nine in 10 look to reduce discretionary spending as inflation erodes take-home pay.
Eating out is set to feel the brunt of spending reductions going forward, with more than 70% of families likely to cut back in this area.
Around half of households expect to cut back spending on holidays (51%) and cinema trips (47.2%).
Richard Lim, CEO of Retail Economics, said that the next Conservative leader and prime minister must implement policies that will affect consumer sentiment positively, but not through introducing tax cuts that would be rapidly swallowed up by food and utility costs.
Former chancellor Rishi Sunak and foreign secretary Liz Truss are in the running to replace outgoing Boris Johnson, who resigned earlier this month.