First Insight’s latest report, “The State of Consumer Spending: Inflation’s International Impact,” takes a deep data-driven dive into inflation’s impact on consumer spending and sentiment across Europe, the U.K., and the U.S.
Researchers at the company found that inflation is now a key driver of deflating consumer confidence. “A vast majority of consumers in Europe and the U.S. report that they feel less confident to spend due to rising prices,” the authors of the report stated. “Germany is the most concerned about the issue, with 86 percent of consumers saying they feel less confident to spend. French consumers are least concerned about rising prices, with three-quarters feeling less confident.”
First Insight found that shoppers in all the countries polled report being impacted by groceries and gas the most, “with the majority shopping for deals and staying within a budget.” The report noted that, on average, most respondents “believe inflation and higher prices will last over two years.”
As a result, markdowns and promotions are shaping purchase decisions. “Groceries and fuel top consumers’ spending priorities, with U.K. consumers, also prioritizing rent/mortgage payments and Italians placing a high priority on health care spending,” the report stated.
Other key findings include that higher grocery prices “are causing many consumers (40 percent) to cut back purchases of name-brand products. Other top categories where consumers are spending less are alcohol and spirits and meat and seafood.”
Shoppers are also pulling back on entertainment spending as a way “to cope with the cost of living crisis. More than half of Spanish consumers are staying home instead of enjoying the nightlife,” the report stated, adding that German shoppers, in particular, “are cutting back on entertainment spending, leading in five of seven categories.”
In Italy, more than half of those polled are vacationing less as a way to save money, which compares to 43 percent for all respondents in the study. And even though at least 92 percent of consumers polled in every nation are concerned about recession, “almost one-third of consumers overall are saving less.”