McKinsey&Company
Stretching the household euro (and pound)
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Déjà vu. European consumers may feel like they’re back in 1999, when consumer price growth soared upon the creation of the single currency. Inflation in the eurozone has climbed for ten months straight, with the index of consumer pricing hitting 7.4% in April 2022; economists expect it to rise even more. Since the war in Ukraine began, the prices of energy and raw materials have soared, further driving up inflation. At the same time, the easing of COVID-19-related restrictions has intensified demand. [FT] |
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Not-so-stiff upper lip. Facing the biggest cost-of-living uptick on record, British consumers are feeling more pessimistic than ever, according to a market research company that has been tracking sentiment since 1974. UK consumers are more downbeat than their peers in France and Germany and more negative than they were during periods of high inflation and unemployment in the 1980s and 1990s. The future is murky, with inflation in the UK predicted to exceed 10% this year. [Reuters] |
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Spending more and saving less. McKinsey’s latest European Consumer Pulse Survey tapped into the sentiment of 1,000 respondents in France, Germany, Italy, Spain, and the UK. In each country, more than half of consumers said their economy was in a bad state. Around 60% of respondents said their households were spending more on energy and utilities, transport and gasoline, and food and essentials. Higher prices also cut into savings, with five of ten respondents saving less. |
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An uptick in trading down. European consumers are responding to new stressors with new behaviors. Many are trading down, with 37% trying a private-label brand, 29% switching to a different brand, and 24% shopping at a different store. Consumers are clearly switching to cheaper options, particularly for household products, snacks and confectionary, and frozen foods. See how European shoppers are confronting inflation, along with how consumer behaviors are changing.
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| — Edited by Katy McLaughlin |
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