Majority of UK Consumers Prove Resilient Despite Persistent Inflation

TransUnion, a global information and insights company, has released its latest Consumer Pulse study, revealing that a significant portion of the UK population remains financially stable despite rising interest rates and persistent inflation.i  


The figures illustrate a contradictory picture of the financial landscape among UK consumers. On one hand, almost six in 10 (58%) have proactively taken steps to reduce their discretionary expenditures such as dining out, travel and entertainment, with plans for further cuts in the future. However, three quarters (75%) of consumers remained steadfast in their belief that they can pay their upcoming bills and loans in full.  


James Robinson, managing director of consumer interactive at TransUnion in the UK, commented: "Our recent Consumer Pulse study underlines a significant divergence within the population, indicating the varying effects of the cost of living crisis. Despite the challenges presented by rising interest rates and inflation, it’s encouraging to see that many consumers are displaying resilience, which bodes well for the future. As we navigate the evolving financial landscape, it’s crucial for businesses and financial institutions to understand and adapt to these distinct circumstances." 


Access to credit 

TransUnion’s study sheds light on the evolving dynamics of consumer access to credit. In fact, despite the fact that the majority of UK consumers (77%) believed access to credit and lending products was important to achieve financial goals, less than half (47%) said they had sufficient access. 


Additionally, the figures highlight the widespread recognition of the importance of credit report monitoring among UK consumers, as nearly eight in 10 (76%) acknowledged this. 


James Robinson continued: “Our study shows that over half (54%) of UK consumers are monitoring their credit report at least quarterly, reflecting a proactive approach towards maintaining a healthy credit standing and making informed financial decisions. We’re really pleased to see that consumers are starting to better understand their credit information and how it’s used. However, we want to drive further improvement in this area and are working closely with our partners, from high street banks to leading credit score providers, to achieve this.” 


For those seeking new credit, the most popular choice was credit cards, according to the latest figures, with 42% planning to apply for a credit card in the next 12 months. Buy now, pay later also proved popular, with more than two in 10 (22%) intending to use these services in the coming year. 


Personal loans and mortgage applications 

TransUnion’s research showed a significant decline in personal loan demand from UK consumers. Of those who said they’d apply for new credit or refinance existing credit in the next year, less than two in 10 (19%) planned to apply for a personal loan. That’s a considerable decrease from the 36% recorded during the same quarter last year.ii 


Similarly, there was a decrease in stated mortgage demand, as expected, from 21% in Q2 2022 to 16% in Q2 2023, most likely influenced by the current instability in the UK housing market and the substantial rise in mortgage rates. Given that interest rates have climbed, potential homebuyers and existing homeowners appear to be re-evaluating their decisions and adjusting their mortgage plans accordingly.  


Generational differences in financial outlook 

James ODonnell, director of research and consulting at TransUnion in the UK, added: "We’re seeing distinct differences in how cost of living impacts consumer credit demand among different generations. A significant portion of Gen Z and Millennials, 48% and 41% respectively, expressed their intentions to explore new credit opportunities, compared to 6% for Baby Boomers.iii These findings provide valuable insights into how varying financial goals, sense of financial security, lifestyles and priorities contribute to the contrasting credit patterns observed across generations.” 


Despite the challenges posed by rising interest rates and inflation, more than six in 10 (63%) of UK Gen Z consumers expressed their intention to either increase or maintain their discretionary spending. This positive outlook indicates confidence in their financial stability and their belief that they can weather the storm caused by economic fluctuations, with more than a quarter (26%) of Gen Z respondents planning to increase their in-store or online retail shopping in the coming months.  


For more information on the Consumer Pulse study findings, please visit the TransUnion website


Unless otherwise stated, all figures are from TransUnion’s Consumer Pulse study, which is based on the survey of 1,000 adults in the UK, conducted 4–9 May, 2023 

 i Monetary Policy Report - May 2023 | Bank of England

ii TransUnion‘s Consumer Pulse Q2 2022 study, based on survey of 1,004 adults was conducted 20 May–1 June, 2022

iii Generations are defined as follows: Gen Z, born 1995–2005; Millennials, born 1980–1994; Gen X, born 1965–1979; and Baby Boomers, born 1944–1964.