Laura Suter, head of personal finance at AJ Bell, comments on the latest data indicating where households are cutting back to tackle the rising cost of living:
“The scale of the Great British Cutback is laid bare, as the nation struggles with rising costs and tries to balance the books. Now almost 90% of the population say they have seen their costs increase, with half the nation cutting back on energy use and 60% slashing their spending on non-essentials.
“The figures show the difficult decisions people are already having to take, with more than a third of the nation having to cut back on food and essentials in an effort to make ends meet. The cost of living crunch means certain groups feel the pinch more than others. Disabled people are more likely to have to cut back on food and essentials, as are people living in deprived areas. Those renting are also more likely to have slashed their spending, with many citing rising housing costs as one of the key factors contributing to their rising living costs. However, as more homeowners come off their cheap fixed rate mortgages and roll on to pricier deals we’ll likely see them feel the crunch more too.
“These figures only run up to the start of summer, meaning that this is just the tip of the iceberg when it comes to the cutbacks we’re all going to have to make. The fact that 24 million people are already trying to use less energy in their home, before we’ve even hit the next wave of higher prices and the increase in energy use in winter, shows just how tough the next six months are going to be. It’s inevitable that the current 16 million people who are cutting their food costs will continue to grow in number over the coming months, as prices keep rising and wages fail to keep up.
“The figures also show that almost a quarter of people feeling the pressure of higher prices are already dipping into savings to pay their bills, while another 13% have turned to debt. We know from the latest Bank of England figures that the borrowing boom in the UK has already begun and we’ll see more people turn to their credit cards and overdrafts as their savings run dry.
“Anyone who is already struggling with costs needs to be braced for more price rises this winter. The best thing anyone who is struggling now can do is to work out whether they can afford the next increase in energy bills or food prices rises and figure out a plan if they can’t. Energy companies, mortgage providers and banks are all prepared for people to struggle with affodability, but it’s much better to work out a plan before missing a payment, rather than burying your head in the sand and hoping for the best.”
