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Shoppers are racing to cancel their repair warranties on electrical goods to save money, amid an escalating cost of living crisis. 

AO World, which sells toasters, televisions and fridges, said that last month there was a spike in cancellations as customers tightened their belts to cope with higher bills and grocery costs.

It comes after almost a quarter of Britons said they were struggling to pay their household bills, according to data this week.

Cash-strapped shoppers have been cancelling subscription services such as Netflix and Disney+ and are buying more own-brand food from supermarkets.

Although the picture had improved since March, the company warned that the trend could have a material impact on profits.

AO World was a Covid winner as shoppers flocked to its website to buy the latest gadgets when they were forced to work from home.

However, the shares lost a fifth of their value, trading at 70p, after it issued a profit warning on Friday, in stark contrast with highs of 429p in January last year.

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