Consumers still worried about living costs in spite of signs of economic growth

Despite growing optimism and signs of economic growth, many are still worried about living costs and have little faith in banks according to consumer group Which?.

In this latest survey, costs of living came top of people’s financial worries. Seventy-eight percent were worried about energy costs, with the same proportion worrying about the cost of fuel, and 70% worried about food costs.

Trust in energy companies remains low at 24%, with 38% of consumers saying they are likely to cut back on energy spending in the coming months. Trust in banks remains at just 30%, indicating that consumers are still wary of bankers following the financial crisis in which the Royal Bank of Scotland was bailed out by the taxpayer, and other financial institutions struggled. Dissatisfaction with interest rates was also reported, with 61% of people worrying about the rates they are getting.

In spite the recent horsemeat scandal, trust in food companies remains relatively high at 59%. However, the cost of food is a concern for many, with 41% saying that they’re likely to cut back on food spending in the coming months, and around 5 million households using credit or savings to pay for food each month.

The report revealed some intriguing attitudes to technology: broadband, mobile phones and TV subscriptions have become the “new essentials”, with fewer people cutting back on these items than food or energy.

Alongside concerns about living costs, there appears to be a cautious optimism amongst consumers. Twenty-four percent said they expect the economy to improve, up 16% from last year. This comes as today’s growth figures reveal that the UK economy grew by an estimated 0.6% in the three months to June this year.

The Chancellor George Osborne said that this figure demonstrates that the economy is “on the mend”, while Labour’s Shadow Chancellor Ed Balls insisted that “families on middle and low incomes are still not seeing any recovery in their living standards” because of a failure of wages to rise in line with living costs.

Richard Driver, currency market analyst at Caxton FX, said:

"This isn't a figure that should be shouted from the rooftops by any means. But given where we have been and where most other global economies are now in terms of economic growth, it is more than satisfactory.”