Preparing for a pandemic: spending dynamics and panic buying during the COVID-19 first wave

In times of heightened uncertainty, consumers face incentives to build up precautionary stocks of essential supplies. We study consumer spending dynamics during one such time, the first infection wave of the COVID-19 pandemic, using household scanner data covering fast-moving consumer goods in the United Kingdom. We document large increases in demand for storable products, such as food staples and household supplies, in the days before lockdown. Households in all socio-economic groups exhibit unusually high demand pre-lockdown, but there is a clear gradient, with the largest demand spikes for wealthier households. Although stories of people purchasing extreme amounts received a lot of attention, higher aggregate demand was mainly driven by more households than usual choosing to buy storable products, with only small increases in average quantities bought on a given trip. Temporary limits on the number of units per transaction, introduced following the demand spike, are therefore unlikely to lead to the avoidance of stock-outs.