EY Future Consumer Index

Rising cost of living forces consumers to tighten grip on finances and get creative with sustainability

• Consumers prioritizing affordability over sustainability for the first time since the mid- pandemic
• Western markets pessimistic on future economic outlook compared to emerging markets
• Growing challenges for fast fashion and customer retention as 64% of consumers ignore the latest fashion trends

LONDON, June 30, 2022 /PRNewswire/ -- Consumers globally are preparing to hunker down for a long financial squeeze, as the increasing cost of living and geopolitical uncertainties push them to seek financial control amid low economic confidence, according to the latest EY Future Consumer Index (FCI).

The 10th edition of the global research of 18,000 consumers, conducted between 18 May to 7 June 2022, finds that 79% of consumers say their finances are a concern, with 62% expecting their living costs to increase even further over the next six months. These concerns over personal finances are affecting the majority of all income levels, from low income (87%) middle class (77%) to high income (64%).

With consumer confidence shrinking, the research reveals a significantly pessimistic economic outlook from the Western markets when compared to emerging/other markets. Many more consumers from the US (54%), UK (65%) Germany (84%) and France (85%) state they believe life will remain the same or worse over the next three years, compared to Brazil (21%), India (24%), Saudi Arabia (37%) and China (38%). With this continued "always-on emergency mindset" adopted from the pandemic, consumers globally are increasingly focusing on controlling their spending and re-adjusting priorities to maintain their values and lifestyles in the face of disruption.

With living costs spiraling each week, the FCI research shows that consumers are demanding affordability, as more than one in three consumers (35%) say they are worried about having enough money to spend on things other than living expenses. Consumers are not simply trading down on their essentials to cut costs, but instead are trying new brands (33%) and switching to private label or "owned brands" (21%), ultimately exposing one-third of a brand's addressable market to risk.

Kristina Rogers, EY Global Consumer Leader, says:
"As talk of a looming recession increases in many markets globally, consumer businesses are bracing themselves for further economic pressures. Much like during the pandemic, consumers are quickly pivoting their priorities and adapting to disruption, but are now increasingly pessimistic about the economic outlook, in particular among European markets."