// Consumers will have £12 billion less to spend on discretionary goods this year, according to new research
// The least affluent in society will be most impacted, with the poorest families discretionary spend plunging 19.5%
The cost-of-living crisis will wipe £12 billion from UK households’ discretionary spending in 2022 with the least affluent most impacted.
New research from Retail Economics and digital wallet HyperJar shows that discretionary income – what people have left after paying for essentials – will plunge 19.5% in these least affluent households, which equates to almost £850 in 2022.
Meanwhile, the average family will see discretionary spend fall 6.5% or £430.
The £12 billion of lost spending is equivalent to almost the entire DIY and gardening sector.
Inflation has soared in recent months, reaching a 30-year high in February, according to ONS figures.
Retail Economics said that the “inflationary shock” will push many households into the red and make it difficult to repay debts.
The firm found that around 13% are currently “just about manage” to cover minimum repayments on credit card bills and 6% said that they are sometimes unable to.
READ MORE: Retail reacts: Spring Statement fails to avert cost-of-living crisis
A cry for help to retailers
Consumers want retailers to help them and reward them better for loyalty, with 85% of those surveyed demanding better rewards from the retailers they shop at the most.
Retail Economics said that this offered a “huge opportunity” to reimagine how they offer customers value and loyalty at a time when trading down and searching for deals will become more commonplace.
Retail Economics chief executive Richard Lim said: “Organising personal finances and keeping on top of budgets can be challenging at the best of times and this is only going to become more difficult as the cost-of-living crisis hits households.
“We’re likely to see recessionary behaviours kick-in for many households who will cut back on the nice-to-haves and prioritise low costs to make their budgets stretch that little bit further. A more cost-conscious consumer will emerge in the coming months, looking to form new relationships with brands who can align to these new priorities.”
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