Inflationary pressures and economic uncertainty are widening the gap between low and middle-income consumers and high-income consumers, according to the latest EY UK Future Consumer Index.
The 10th edition of the survey of more than 1,000 UK consumers found that 37% of low and middle-income consumers are only purchasing the essentials, compared to just 26% in the last survey in February 2022.
A third of these consumers (32%) are now switching brands to try cheaper alternatives, up from 26% in February.
Affordability has also risen in importance since February 2022, with 27% of all consumers now adopting an ‘affordability first’ mindset, an increase of 8%.
The EY research also found significant levels of pessimism among low-income consumers, with 46% saying that they feel financially worse off compared to February this year.
In addition, 44% expect their financial situation to be worse in 12 months, while only 39% feel in control of their lives.
A significant minority of middle-income consumers are also bracing themselves for tough times with 33% expecting their financial situation to be worse in 12 months.
Conversely, just 15% of high-income consumers expect to be financially worse off in the next 12 months with 61% of this income bracket saying they are excited about spending money on things that will improve their lifestyle.
Silvia Rindone, EY UK&I Retail Lead, said: “Our research reveals that instead of consumer behaviour staying relatively consistent, we are seeing consumers drifting towards two extremes. At one end are cash-strapped consumers who are watching every penny, at the other are those who are willing to spend and want retailers and brands to excite and entice them to do so.”
Across all income groups, consumers are making more economical and sustainable choices. Of those surveyed, 90% said they are trying not to waste food and 55% are paying more attention to the environmental impact of what they purchase.
