Scots cutting back on essential items amid cost of living crisis 

The Fraser of Allander Institute report suggested consumers were starting to 'modify' their shopping behaviour as Scotland's pandemic recovery slowed.

Scots cutting back on essential items including food and fuel amid cost of living crisis iStock

A third of Scots have slashed their spending on “essential” items such as food and fuel amid the biting cost of living crisis.

Consumers across the country started to “modify” their shopping behaviour in the last quarter by cutting back on casual spending, according to a new report.

The Fraser of Allander Institute also warned Scotland’s recovery after emerging from the Covid pandemic is beginning to “falter,” as soaring inflation and prices for basic products look set to “persist for a while longer”.

The think tank said it now expects growth of 0.5% next year, instead of the 1.5% it previously forecast.

Institute director professor Mairi Spowage said: “The analysis we have carried out for this quarter’s commentary indicates that inflation will be higher and persist for longer than we thought in March.

“This has the potential to limit the economic recovery we hope to see during 2022 and 2023, as consumers cut back on discretionary spending and businesses limit production due to input costs.

“Of course economic forecasting is a tricky business at the best of times, but forecasts are highly uncertain right now.”

A third said they were spending less on essential items – a figure which jumped to half for “non-essential” purchases.

The report said older people were less inclined to spend on food and fuel, while the younger generation continued to be priced out of property and were being hammered by public transport costs.

Angela Mitchell, senior partner at Deloitte, which sponsors the institute’s economic commentary, added: “While Scotland’s economic recovery was well under way in the first quarter of 2022, challenges for businesses are likely to remain throughout this year as a result of the cost-of-living pressures driven by both rising inflation and interest rates.

“For business leaders, focus must turn to ways to foster productivity which are not solely dependent on the ups and downs of the economic cycle but can be driven by other factors, including prioritising technology, innovation and digital transformation.

“Organisations should consider the changing nature of work and draw on their experiences developed during the pandemic to bolster resilience and ensure a path through the current economic climate.”

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