Brits tighten belts as inflation rises and household budgets come under pressure

UK households are tightening their belts as rising prices prompt growing numbers to cut back on non-essential spending, socialising and eating out, according to new research from Novuna Personal Finance.

The findings from the latest Novuna Consumer Confidence Tracker come as official figures show UK inflation rose to 3.1% in August, up from 2.9% in July, with rising transport costs – particularly petrol and diesel – making the largest upward contribution to the latest monthly increase.

Novuna's research shows that households are already changing their spending habits in response to mounting cost pressures.

Over the past three months, the proportion of households cutting back on non-essential purchases increased from 35% to 40%, while those cutting back on socialising and eating out rose from 31% to 36%.

At the same time, more households have been looking for cheaper ways to cover their everyday spending. The proportion saying they had switched to cheaper brands or retailers increased from 26% to 31% over the past three months.

The trend looks set to continue, with 34% of households saying they intend to keep their spending tightly controlled over the next three months, up from just 25%.

The figures suggest that households are responding to financial pressures by taking greater control of their outgoings, rather than necessarily expecting their financial position to deteriorate. Just 22% expect their household finances to get worse over the next three months, down from 27% previously.

Theresa Lindsay, Chief Marketing Officer at Novuna, said:

“Families are battening down the hatches again. More people are switching to cheaper brands and retailers to manage everyday spending, while cutting back on non-essential purchases, socialising and eating out to make their money go further.

“What’s striking is that fewer households expect their finances to get worse, yet we’re seeing a rise in those planning to keep a tight grip on spending, which shows that consumer remain cautious. With inflation rising and the Budget approaching, households will be watching closely for anything that leaves them with even less room to spend.”

Key findings from the Novuna Consumer Confidence Tracker

• 40% of households have cut back on non-essential purchases over the past three months, up from 35%.
• 36% have cut back on socialising or eating out, up from 31%.
• 31% have switched to cheaper brands or retailers, up from 26%.
• 34% expect to keep their spending tightly controlled over the next three months, up from 25%.
• 22% expect their household finances to get worse over the next three months, down from 27%.

The Novuna Consumer Confidence Tracker runs quarterly to monitor how household finances and resilience are changing over time, tracking attitudes and behaviours across spending, saving, borrowing and financial pressures for the months ahead.