Guy Perrem, Business Director with Core Research looks at some of the findings from its latest Mindset report which unearths some interesting discrepancies that brands should take note of.
The cost-of-living crisis, which began in earnest in April 2021, saw inflation rates reach a contemporary high of 9.4% in October 2022. Since that peak, the rate has been on a downward trajectory, albeit with some fluctuations, and inflation in January 2023 was reported at 4.1%. This decrease was undoubtedly welcome news, and, correspondingly, consumer concerns about the cost-of-living situation have diminished. As of January, 50% of the population remains concerned about living costs, a figure comprised of those “extremely concerned” (26%) and “very concerned” (24%). This is a decrease from previous highs of 64% of the adult population during the summer and October of 2022, illustrating a direct correlation between inflation rates and the level of public concern.
However, the rate of change between these two factors reveals a notable discrepancy. While inflation has more than halved, concern has only reduced to 80% of its previous level. This discrepancy raises questions. Some consumers, shielded by personal financial stability, are insulated against the still-rising prices. Others, however, continue to struggle under the weight of escalating costs and limited financial resources, exacerbated by the post-Christmas financial hangover and winter bills.
The inflation rate, while a straightforward economic indicator and predictor of consumption markets and lending rates, lacks empathy for individual circumstances. It fails to capture the emotional toll of significant changes in living costs and their broader implications for households.
The 26% of individuals who describe themselves as “extremely concerned” highlight a stark reality concealed by the inflation rate. Being “extremely concerned” correlates with anticipating a worsening general economic situation over the next 12 months, including a decline in household financial stability, increased unemployment, restricted spending on household necessities, potential reliance on high-interest credit options, limited savings, and significant difficulties in making ends meet. This group is also more likely to support anti-immigration protests, indicating a socio-political dimension to their concerns.
The emotional cost for those deeply worried about living expenses includes increased anxiety, stress, and despair, coupled with reduced enjoyment and happiness in daily life. These individuals—our family, neighbours, friends, and community members—are often working people residing in average-sized homes.
For brands, the deceleration of inflation poses a question: Is it time to return to business as usual, or is there an ongoing opportunity to demonstrate genuine empathy towards consumers under stress? Seeking value and prudent income management remain constant consumer behaviours, more so among those highly concerned. This situation calls for brands to not only compete on price but also adopt an empathetic tone in their messaging, ensuring that this empathy aligns with the value they deliver to consumers.
Guy Perrem is Business Director with Core Research. To download the latest Mindset report click HERE
