Almost 90% of adults claim they have experienced a rise in their cost of living according to ONS figures. The figures referenced exclude April and by extension do not include the reverberations of April’s record increase of the energy price cap, increases in council takes and in National Insurance. It’s a worrying indication of what is to come and just how acutely the economy could be impacted in the remainder of the year.
The data was reported by the Office of National Statistics and covered from November last year through to March of this year.
Whilst most have noticed an increase in their cost of living, an alarming 23% of adults explained they were finding it difficult or very difficult to meet their usual obligations regarding household expenses in the last month when compared to a year prior. This figure has increased from 17% who found challenges in meeting their household bills in November last year.
Nearly 20% said that due to cost pressure they were borrowing more money or using a higher proportion of their available credit lines relative to a year ago. 43% claimed they would be incapable of saving money over the coming 12 months, up markedly from 34% reflected in November.
Given the explosion of energy bills, 43% said they were finding it somewhat difficult or very difficult to pay their energy expenses. Meanwhile 3% said they were in arrears on rental or mortgage payments.
These figures do not even include April meaning the aftershock of the energy cap rising is not factored in. It is expected energy bills will increase a record £693 per year which translates to an average of 54% on average.
Poorer Families Are Being Hit Hard
Other cost of living hikes that come into effect in April such as increases in council tax and National Insurance will further pressure consumers’ finances. Not to mention fuel costs remain elevated and inflation is expected to continue to soar.
Hugh Stickland, from the Office for National Statistics, said: “Today’s analysis shows nearly nine out of 10 adults tell us they have seen an increase in their cost of living over the last month.
“This is impacting people’s financial resilience, with more telling us they are finding it harder to pay bills, and more unable to save money in the next 12 months.”
With interest rates likely to rise in an attempt to protect against fervent inflation, the cost of debt on credit cards, loans and mortgages are all also expected to soar further, putting pressure on consumers, likely thrusting many into crushing debt.
Jack Leslie, senior economist at the Resolution Foundation, said the figures showed the cost of living crisis is “already hitting UK families hard”.
“The combination of shrinking pay packets and rising costs means that the pressure on households is building, with lower-income families set to feel the squeeze the most, and over a third of the most deprived fifth of households in England already saying it has been difficult or very difficult to pay their usual bills.
“This is set to get worse, with the estimated number of households experiencing fuel stress hitting five million this month.”
Labour jumped at the finding using the opportunity to slam Rishi Sunak’s lack of actionable plans to actually help those who are now desperately battling to stay afloat. Leader Keir Starmer said “Working people are being hammered, and the worst is about to hit”
Adam Scorer, chief executive of the charity National Energy Action, said: “Energy bills haven’t landed yet, but people are not heating homes, not having a warm bath or shower, not using cookers and washing machines, not letting their kids watch TV.”
“Knowing it will only get worse as we head to winter sends a shiver down my spine. You can’t measure this crisis just by pounds and pence. Measure it in how it is destroying basic quality of life for millions. “When we get to winter we will be measuring it in thousands of lives lost.”
It’s a worrying analysis and signs seem to point to a very bleak winter for Britain’s lowest income earners.