Everyone is talking about the perfect storm of inflation, soaring bills and stagnant wages, with the cost-of-living crisis now in full swing. However, few are aware of the wider social effects of these tightening conditions. The hidden impact of the cost-of-living crisis will have a huge impact on society’s most vulnerable, making the case for brands to focus their resources on where they can make a real difference.
The cost-of-living crisis refers to the fall in real disposable incomes – that is, inflation-adjusted incomes after taxes and benefits. Rising inflation has been felt already with record energy and fuel prices, caused by depleted gas supplies in Europe, pandemic-induced supply-chain disruptions and the Russo-Ukraine war’s effect on European trade. This has placed current inflation at 9.1%, a 40-year high, and the Bank of England forecast has it peaking at 10.2% in the fourth quarter of 2022. This is all amplified by the fact that wages are growing at a slower rate, with state benefit increases being marginal at best. In a nutshell, we can’t afford as much as we once could.
So why do brands need to change their behaviour? Unsurprisingly, the crisis will affect different societal groups in different ways. It’s time for brands to evaluate whether they can focus more of their attention on where they can really make a difference, by supporting those who need it most. A recent IPA Poll discovered that consumers don’t want brands to provide them with fun, happiness and entertainment during the crisis; rather, they want brands to help them directly where it matters most: their finances. For those at greater risk of financial strain, this becomes even more pertinent.
But this isn’t just a nice to have for brands. If there has ever been an era where brand loyalty might waver, it’s now. By considering tangible, effective ways to alleviate discriminate hardships felt by their audience, brands will go some way to preserving this sacrosanct performance factor.