Worries over economy and rising costs dent post-pandemic hopes

The glimmer of hope for a move to a more positive post-pandemic world for consumers has been hit with growing economic uncertainties in the past few months, shrinking consumer confidence once again, according to the latest EY Future Consumer Index.

The latest edition of the quarterly global survey of 18,000 consumers, conducted in February 2022, found that the rising cost of goods and services is impacting 52% of global respondents’ ability to purchase goods and is affecting their purchasing decisions.

While this impacts lower-income earners the most (62%), the survey shows that middle-income earners (48%) and high-income earners (42%) are also being squeezed. Emerging markets are feeling the pinch strongly, with 62% citing affordability affecting their choices (South Africa 77%, India 64%, Brazil 63%, China 42%), compared with 45% of respondents from developed markets (US 50%, Canada 52%, UK 42%, France 40%).

Driven largely by the inflationary impact on prices and the anticipation of new Covid-19 variants, the survey suggests that consumers will continue to rein in their consumption, trade down to cheaper alternatives, and purchase fewer non-essentials. Some key items where respondents are spending less include clothing (38%), beauty and cosmetics (35%) and alcohol (30%). Many are already seeking cheaper alternatives for fresh food (20%) and packaged food (19%).

Kristina Rogers, EY’s global consumer leader, said: “Despite an economic uplift in many countries since the pandemic, consumers are not optimistic about their future due to rising inflation, fundamental changes in their work and personal lives, and a growing unease around current global geopolitical issues.

“With their spending power eroding and uncertainties looming, consumers are having to rethink their spending choices, not only around ‘nice to have’ purchases, but also essential day-to-day goods.”

The survey also found that consumers are choosing to make more sustainable purchases, doing what they can to preserve their environment, with 56% saying they will pay more attention to the environmental impact of their purchases and 52% committing to pay more attention to the social impact. Two fifths (42%) say they will only buy from brands that align with their own values – a view held by the same percentage of the Generation Z population and 48% of Millennials.

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