Inflation rates may be falling, but people expect further price rises
Welcome to the seventh edition of the Ipsos Cost of Living Monitor, a 32-country survey which tracks how people around the world feel about their finances during the polycrisis.
Two years ago in late 2022, we titled our edition of the Cost of Living Monitor 'Feeling the Pressure' and two years on there is little sign of that pressure easing when it comes to people’s day-to-day lives.
Inflation rates have fallen in many countries around the world and coupled with that interest rates are being cut by a number of central banks. With this the assumption may be that people are feeling more positive about their own financial situation and the more positive about where their country’s economy is headed in 2025. But the legacy of high inflation over the past few years is that an expectation of price rises has been hard-wired into public consciousness: we find is the proportion of people thinking the rate of inflation will increase is higher than it was earlier this year, despite prices rising more slowly.
People expect this across all areas of spending including utilities and food prices. Even in Indonesia, which has seen five consecutive months of deflation (where prices are falling), more than two-thirds expect the cost of their food shopping to increase in the coming months.
There is often a lag between when inflation rates fall, and we see consumer confidence returning. However, what we are now seeing in many countries is a rise in the number of people who say they are financially struggling. This is especially true in some of the world’s richest economies including the US, Japan and Australia.
It is in markets in North America and Europe where people’s pessimism around their personal finances is strongest.
At a global level 37% say they are worse off now than before the COVID-19 pandemic and this feeling is higher in countries in G7 countries like Italy, France, Germany and Great Britain.
And this all has political consequences. This was the year people’s anger at their financial situation cut through at the ballot box. Incumbents in advanced economies such as the US and the UK lost elections this year. Next year sees voters in Germany and Canada heading to the polls.
Combined with this we have the troubling backdrop of six in ten people telling us society in their country is broken, alongside an enduring lack of consensus on how to achieve economic growth.
In the report, we highlight some of the key themes from our latest data, followed by the results for all 32 countries in the survey.
There is much food for thought – including a focus on the how the cost of living crisis has affected people’s mental health, another crisis of our age. We look forward to discussing with you what it all means for your country, category or industry sector.
Ben Page, CEO, Ipsos