The information provided in this article was accurate at the time of publishing and should be read in the context of the date it was published. Views in this article are those of the author alone and do not necessarily represent the view of Scottish Friendly.
Were you thinking of buying your nearest and dearest a Louis Vuitton suitcase for Christmas? A Chanel handbag perhaps? Or maybe you want to back Britain by surprising a certain someone with a headscarf from Burberry?
No? Neither was I – which is just as well as it’s reported that some of the world’s most famous luxury brands — including Burberry, Chanel and Rolex — have raised their prices by up to 30% in the wake of the Brexit vote.
The price hikes among luxury brands are the latest to be unveiled in the aftermath of the Brexit vote and while you and I are not likely to be affected by price increases for products like these, Scottish Friendly’s latest Disposable Income Index (DII) has revealed that over half (55%) of households are worried about an increase in the cost of food and more than four in ten (45%) are anxious about petrol prices.
For some computers may not be essential; for many they are a very necessary part of life and work. Apple has increased the prices of some of its computers by hundreds of pounds and, definitely at the essential end of the scale, a range of food products — from Marmite to Walkers crisps — have also have had price increases so it’s no wonder people are worried. Especially as it looks like there’s more to come according to the Bank of England.
Scottish Friendly’s quarterly report, which has been compiled in conjunction with leading think-tank the Social Market Foundation, reveals that disposable income in October remained relatively flat with the average household left with £990 after paying for essentials such as housing, groceries and bills.
However, with growth expected to slow in the wake of triggering of Article 50 and the dramatic fall in the value of sterling, many cite concerns about the impact inflation will have on their financial well-being, despite employment rates remaining at record highs.
With the result of EU referendum still fresh in the minds of many households, a large minority (46%) of the nation remain apprehensive about what impact the vote to leave will have on the pound in their pocket. The proportion of UK households spending more than their monthly income on housing costs has remained relatively flat at around 7%.
On the other side of the coin, people still feel secure in their jobs with employment at an all-time high, despite the uncertain outlook. A quarter of people (25%) are concerned that leaving the EU might affect their job. However, the younger generation were more worried about the impact with more than four in 10 of 18-24 year olds (44%) and 49% of 25-34 year olds saying they remain concerned their jobs are at risk.
With monthly disposable income staying relatively flat compared to last quarter, only 19% of households feel they have more cash left over at the end of the month than they did 12 months ago and half (50%) of households are worried about how they would deal with a big, unexpected bill, such as the car or washing machine breaking down, and only 35% believe they will be better off in 12 months’ time. While this is a similar proportion to Q3 and Q2, it is a slightly lower proportion than in Q1 2016, when the figure was 41%.
The results of our latest survey show the country is genuinely worried about the impact inflation is going to have on their day-to-day lives. This has come at an awkward time too as disposable income has remained relatively flat while prices have begun to rise in real terms in the run up to Christmas. While the impact of Brexit is still anyone’s guess, it is clear consumers are worried about the pound in their pocket not stretching as far as it used to.
Read the full results and report of the latest Scottish Friendly Disposable Income Index here
At our My Insights hub you can also check out our Disposable Income Index tool and see how your household finances compares with others.
No advice has been provided by Scottish Friendly. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk. Advisers may charge for providing such advice and should confirm any cost beforehand.