This morning the Office for National Statistics revealed that the UK inflation rate has hit double digits at 10.1%, a higher rate than analysts were predicting.
The last time price rises were in double digits was in February 1982. Rising food and drink prices made the biggest contribution to the change in the inflation rate between June and July, with basic items such as bread, cereals, milk, cheese and eggs having the strongest impact on rising price.
Whilst businesses across the UK will see today’s news as yet another reason to cut back, analysis suggests those who see the current economic conditions with a “glass half full” perspective, will gain the greatest share of voice.
Philippa Snare, SVP EMEA at The Trade Desk, said that marketers who maintain their media spend and invest in data-driven insights will be best poised to keep their brands front of mind amongst an increasingly cautious consumer base.
“While today’s figures will undoubtedly impact consumer sentiment, it’s never been more important for brands to continue connecting and engaging with the public - and that means maintaining ad spend", Philippa said.
“Despite the government advising to cut marketing budgets, evidence suggests that the companies who maintain or increase their marketing budgets during recessions, experience proportionally higher sales. Plus - a strong ad market equals a strong economy, with marketing spend shown to have an oversized contribution to GDP based on investment.
“Keeping the brand light burning throughout the darker days ahead”
While all advanced economies have seen a rise in inflation, it has been worse in the UK than in other G7 countries and most European countries.
While all demographics will feel the pinch, the Institute of Fiscal Studies is warning that the poorest fifth of households could face inflation of 18%, because they spend a larger proportion of their budgets on energy and food.
Snare added: “Amidst growing inflation, there’s no doubt many consumers will be cutting back - and for advertisers, that means focusing on keeping the brand light burning throughout the darker days ahead. It’s not about pushing specific products, but about the longer term brand-building mission to show that brands understand their specific customer needs right now.
"It’s critical to remember that recessions actually provide the perfect opportunity to achieve more, even if with a reduced budget. After all, the cost of pulling advertising spend and then trying to reignite the brand light will be enormous.”