Britain Braces For Price Hikes

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Britain Braces For Price Hikes

Britain Braces For Price Hikes
May 24
09:42 2017

While the outcome of Brexit may be uncertain, Mintel’s flagship British Lifestyles report reveals that consumers are braced for an expensive future ahead. Over four in five (83%) Brits are currently concerned about seeing price rises on goods and services, with 59% worried about the mounting cost of groceries, 35% worried about the climbing cost of holidays and 26% fearing that clothes prices will ascend.

Beyond concerns over rising prices, Brits are also worried about “bigger picture” issues. As many as 81% of UK consumers are concerned about the future health of the NHS, while 68% are worried about the UK economy and 67% are nervous about the state of the environment. By contrast, people appear less concerned by issues relating to their personal situation, with half (48%) of all adults concerned about their ability to pay the bills and less than two in five (37%) worried about their level of debt.

Today, 46% of UK consumers say that Britain’s vote to leave the European Union will have a negative impact on the cost of living in the UK, with this proportion unchanged from when the question was first asked in July 2016, immediately following the referendum result. However, attitudes towards Brexit’s impact on the economy appear to have softened, as 31% now believe it will have a negative impact on the UK’s economic growth, down from 39% in July 2016.

Jack Duckett, Senior Consumer Lifestyles Analyst at Mintel, comments: “Following the UK’s vote to leave the EU, there has been a great deal of discussion about how it will impact the price of goods and services. Mintel research underlines particular concern about the rising cost of in-home food, and inflation is undoubtedly going to squeeze household budgets. However, broader consumer confidence is still relatively strong. Despite rising prices, most people still expect their finances to hold up well over the next year. It’s the bigger picture issues that the UK faces, such as the NHS and the economy, that are the main concern, rather than people’s own finances.”

Despite the political turbulence, Mintel research found that consumer expenditure rose by 3.7% in 2016 to reach £1.2 trillion. While growth was seen in nearly all of the 17 individual sectors included in Mintel’s British Lifestyles report, it was notably lower across all fast-moving consumer goods markets, reflecting ongoing supermarket price wars.

By 2021, it is projected that Britons will spend £1.4 trillion per annum, with growth of 17% expected over the next five years. Mintel predicts that the foodservice, personal finance, and leisure and entertainment categories will flourish in this time, while the household care, technology and clothing and accessories markets are expected to face challenges.

Now in it’s 27th year, Mintel’s British Lifestyles report tracks spending across all major consumer markets. Highlights from the 2017 report include:

Health hunting shoppers whip up sales of ‘better for you’ foods

Fish, nuts, popcorn and free-from foods were all rising stars in the in-home food category in 2016 as Brits continue to jump on the health wagon. Sales of chilled fish and shellfish grew by 3% in 2016, while sales of free-from foods rose by 16%, popcorn popped by 10% and nuts grew by 3%. On the other hand, pasta, pre-packed bread and processed poultry and meat all saw declining sales in 2016 due to their perceived negative health implications. While sales of pasta fell by 4% in 2016, pre-packed bread sales were sliced by 10% and processed poultry and red meat were carved by 4%.

Mintel research shows Brits eating habits are changing. One in three (33%) say they have tried eating less meat, while half (50%) of those who eat fish say that for health reasons they are eating more of this than a few years ago. What’s more over one in five (22%) are limiting their carbohydrate intake, with 20% of users regularly substituting pasta, rice and noodles with vegetables in the style of familiar carbohydrates. Bread use in particular is going stale with just a third (34%) of Brits saying they had eaten packaged sliced bread at least once a day in 2016, down from 47% in 2014.

War on sugar refreshes sales of bottled water

The upcoming 2018 soft drinks levy means that there’s no let-up in the war on sugar. Almost a quarter (23%) of non-alcoholic drinks launched in the UK in 2016 carried a low, no or reduced sugar claim, up from 15% in 2011.

The focus on sugar reduction is helping to drive growth in the bottled water market. Half (48%) of bottled water drinkers say that concerns over sugar prompted them to switch, with sales growing by 9% in 2016 to £2.2 billion.

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