Inflation: Old Story/New Story
If you were doing a word of the year for 2022, there would be a strong case for “inflation” to take the prize. The cost of living has been at the forefront of people’s minds as the pandemic moved into the rear-view mirror.
And it has truly been an international phenomenon. By May, the UN’s regular Economic Briefing reminded us that this is rather more than an uncomfortable experience for the developing countries: “Inflation in developing countries – generally higher and more volatile than in developed countries – is also rising markedly and becoming more widespread as well”.
As recently as January, Coronavirus was still the number one global concern in our 29-country What Worries the World survey, with only one in five (20%) choosing inflation as a worry. Now four in ten (42%) choose rising prices as one of the biggest issues affecting their country and it is the top issue in 13 countries.
Inflation to stay in 2023?
The expectation is that things will not be getting any better in 2023. Seven in ten (69%) expect prices to continue to increase over the next year. However, this is down slightly from 75% back in June, raising the question of whether we have reached peak worry about inflation. In November, global concern about inflation remained unchanged from the previous month’s figure, the first time worry about inflation hadn’t risen since July 2021. While it may be too soon to say whether inflation concern has peaked, there is the feeling that other economic problems could play a more prominent role in 2023.
After years of a very strong jobs market in western countries, there is the perception that, in 2023, unemployment could be more of an issue. Six in ten (61%) expect unemployment to rise in the next year, up from 56% in June. However, it is a mixed picture globally. Our latest Global Inflation Monitor finds an increase in 18 out of 28 countries with the biggest rises since June seen in the Netherlands (+23pp), Sweden (+20pp), and Denmark (+17pp).
Countries matter
In Europe, this worry is not limited to just unemployment and Europeans are particularly pessimistic about where things are headed over the coming year. While a third globally feel like their standard of living will fall in the next year, this is higher in Europe compared to other parts of the world. One in two in Turkey (52%), Hungary (50%), Poland (48%), Belgium and Great Britain (47%) feel this is the case.
Europeans are particularly pessimistic about where things are headed over the coming year
While there is the expectation that things will get worse in Europe, it’s in LATAM where people are already struggling the most. One in two in Argentina (56%), Peru (50%) and Colombia (46%) say they are already finding it difficult. In Europe, people are more likely to describe themselves as “just getting by” with four in ten in Belgium (43%), Spain (44%), and Italy (42%), and more than one in two in Poland (51%) saying this is the case.
This difference between the current situation and expectation within Europe could perhaps be explained in part by many Europeans facing the spectre of inflation for the first time in decades. The UK is seeing its highest rate of inflation in 41 years, while in Italy it’s at its highest level in 39 years. In comparison India’s rate of around 7% is nothing new, compared to double-digit inflation experienced over the last decade. Meanwhile, Brazil has a lower level of inflation now than it did at the start of year, the only G20 country where this is the case.
These different perceptions of inflation mean that consumer behaviour and their responses to rising prices can vary from place to place. While many in Europe and North America are cutting back spending, our research in India has found that Indians have adopted a more positive outlook during this period of rising prices, focusing more on boosting their income and maintaining purchasing power than reducing consumption.
Remember the lessons of the pandemic
The coronavirus pandemic presented government policymakers and brands with a single and very specific problem to focus on. Now, as 2023 begins, we have many things to deal with: inflation, war in Ukraine, the devastating effects of climate change becoming more apparent. What’s more, all of this comes on the back of two years of precariousness, disruption and “unprecedented times”. To describe this phenomenon, we see the advent of the term “polycrisis”: interacting crises that result in harms greater in sum than the crises would produce in isolation.
Coming back to inflation, what is the role of brands in all this? Globally, six in ten consumers blame businesses making excessive profits as a driver of the cost-of-living crisis. Just as we saw when Covid first emerged, the need to communicate with empathy and transparency is still very relevant while people are dealing with this multitude of crises. Our Ipsos Global Trends Survey shows that people have an increasing desire for brands to reflect their values, to stand up on social issues and to generally take a position.
One of our community members in the US summed this up: “[I want] more compassion and showing care for their customers and employees, rather than pushing a product.” Watch the video below to learn about how brands can communicate effectively around price and value by delivering with empathy, while staying unique and memorable.
As brands themselves try and navigate these tricky waters, the advice of Aníbal Cantarian, Ipsos Country Manager in Argentina - a country well used to dealing with inflation - is instructive: “During the storm you need to adapt your strategies, but you also need to think about what is going to happen when the storm stops.” Read more here.
The move to a higher inflation age from the abnormally low inflation decade we just lived through is going to be hard for business and consumers. Brands that can show they are on consumers’ side – as supermarkets did after the 2008 crash – and keep marketing, will perform best. Above all, for both brands and politicians, empathy will matter. It’s one reason we focus on it in our forthcoming brand success model: in hard times, people want reassurance.
Table of content
- January - A third year begins
- February - War returns to Europe
- March - Antarctic heatwave
- April - A populist year?
- May - Cost of living crisis
- June - Women's rights
- July - A cruel summer
- August - A new Cold War?
- September - National identities
- October - Green Transport
- November - Peak population
- December - World in motion
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