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Consumers adjust their spending on the back of cost of living concerns

MEDIA RELEASE: July 8 2022: As prices for key household items rise, and with predictions of higher inflation to come, Lightspeed’s Spotlight study found that households in Australia are almost universally concerned about the cost of living.

95% of Australians express some level of concern about the current cost of living situation, with almost 20% declaring they are extremely concerned. When asked to think ahead to the end of the year, the proportion of Australians who are extremely concerned about inflation rises to 29% of Australians, while only 2% say they are not concerned at all. Predictably, it’s those on lower incomes who are feeling the bite the most, with 28% of those earning under $50k a year expressing extreme concern about current inflation rates, compared with just 12% of those earning over $100k annually.

A large portion of the population are concerned about basic living expenses – in particular, the cost of fuel, food and utilities. Consumers are most concerned about utilities, with 95% citing this as a concern, this is followed by food (94%) and fuel (93%). Low-income households are the most concerned about food and utilities, however, the majority of households with an income above $75k are also concerned about utility prices.

In the face of increased cost of living concerns, 82% of Australian’s have already made active changes to their spending. Lightspeed’s Spotlight study indicates further reductions in consumer spend, particularly around discretionary purchases. 49% of Australian’s surveyed identified that within the next 4 weeks, they will spend less on clothing and footwear, while a further 47% will spend less on entertainment. Over the same period, 82% of Australians noted they are planning on spending the same or more on groceries, while 73% anticipated their spend on streaming services would also remain the same or increase. Andy Hutton, General Manager of Lightspeed Australia and New Zealand commented that “these trends suggest that in response to inflationary pressures consumers are returning to their ‘lockdown habits’, replacing going out for food and entertainment with alternatives within their own homes”.

When asked who or what is to blame for rising prices, Australians believe a trio of factors take the brunt of the blame – with the war in Ukraine (75%), supply chain issues (74%) and Covid-19 (73%) listed as the primary causes. Just over 1 in 3 Australians hold the former Liberal government responsible for the situation.

Even considering recent efforts from the new Labor government to relieve cost of living pressures, there remains a widespread appetite amongst the population for the government to do more. 83% of people surveyed signalled they want further government intervention to combat the rising cost of living, with consumers indicating that they wanted subsidies on fuel (53%) and food (35%), and a general lift in wages (39%).

Other findings from Lightspeed’s Spotlight study include:
• Queenslanders are the most concerned about inflation – perhaps fuelled by their headline inflation rate running at 6%, almost a full percentage point higher than the national average.
• Those aged 35-54 are significantly more likely to be extremely concerned about the current situation than other age groups.
• Women are more likely than men to be extremely concerned about both the current and future situation regarding inflation.
• Single parents and households with an income under $50k are the most concerned about increasing food prices.

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About the study
1,000 permission-based respondents from Lightspeed’s Panel were interviewed between the 22nd and 27th of June 2022.

Website: Lightspeed

 

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