Since the start of Covid19 pandemic, we have noticed an increase in prices. In real terms, the wage inflation has been in single digits as Britons are feeling the pinch of rising cost of Living crisis. Whether you are a homeowner or a renter, a rise in interest rates has resulted in higher rents and increased mortgage payments.
We’ve never seen a rise in poverty within such a short timeframe. With fuel costs on the up and rising energy bills, adults are turning to foodbanks for support. Russian invasion of Ukraine has resulted in increased import costs particularly for food as supplies dwindle. With China in another lockdown as of May 2022, we are continuing to see inflation pressure on our imports particularly car parts and inflation in second-hand car market.
Recent ONS key findings make for a rather grim reading as we ponder whether inflation is really at 9% as reported by the Bank of England?
Key Findings cover period from 16th to 27th March 2022:
1. Increase in cost of living
87% of adults reported increase in their cost of living over the previous month in March 2022 (covering from 16th to 27th March 2022). This is a 25% increase whereas only 62% of adults had reported an increase in cost of living in previous period of November 2022 (3rd November to 14th November 2021).
Question: Over the last month, has your cost of living changed?
2. Difficulty in paying normal household bills
23% of adults found it very difficult or difficult to pay their normal household bills in March 2022 when compared with a year ago. In the previous survey of November 2021, 17% of all adults had found it difficult or very difficult to pay their bills.
Question: How easy or difficult has it been to pay your usual household bills in the last month, compared to a year ago?
Figure 2: Around 1 in 3 (34%) adults living in the most deprived areas reported it was difficult or very difficult to pay their usual household bills in the last month, compared with a year ago.
All adults in England, 3 to 14 November 2021 and 16 to 27 March 2022.
3. Difficulty is paying energy bills
Increase in gas and electricity bills was the second most common reason is cost of living crisis in Opinions and Lifestyle Survey conducted by ONS.
Unsurprisingly, 43% of adults who pay energy bills found it very difficult or somewhat difficult to pay their bills.
Adults who pay energy bill more than half (57%) living in the most deprived areas of England reported difficult in affording their energy bills. Adults in lease deprived areas around one third (35%) reported the same.
Overall, 6% reported that they were behind in their gas or electricity payments in March 2022. 13% were in arrears in most deprived areas compared with just 4% in least deprived areas.
It seems a greater proportion of renters (13%) fell behind on energy bills compared with just 3% of mortgagors and 2% of those who own their home outright.
Questions: Among those who said they have gas or electricity supplied to their home, “Are you behind on payments for your gas or electricity bills?”
Figure 3: Around 1 in 10 (13%) adults living in most deprived areas reported that they were behind on payments for gas or electricity bills
Adults who said they have gas or electricity supplied to their home in England, 16 to 27 March 2022.
4. Struggling to pay increased housing costs
30% of all homeowners and renters reported that it was very difficult or somewhat difficult to afford housing costs with 3% claimed to behind on mortgage or rent payments in March 2022 (16th to 27th March 2022).
34% of all renters reported that their rents had increased in last 6 months. As mortgagors were on fixed rates, 19% reported that their mortgage payments had increase during the same period.
Adults currently paying off a mortgage and/or loan, or rent, or shared ownership in Great Britain, 16 to 27 March 2022
5. Unable to save money
43% of all adults believe that they won’t be able to save money over the next 12 months. This is the highest percentage there has been since the question was first asked in March 2020 (27th March to 6th April 2020).
The ability to save is being eroded by increased cost of living because earnings are not increasing at the same rate.
Question: In view of the general economic situation do you think you will be able to save any money in the next 12 months?
At the start of coronavirus pandemic between 26% to 40% of all adults reported that they won’t be able to save money. Since autumn 2021, the ability to save money has changed.
Increased cost of living crisis means adults have switch to survival mode with 45% adults reporting that they won’t be able to save money over the next 12 months.
There’s a clear gap between the rich and the poor. With 55% of adults living in most deprived areas of England unable to save money over the next 12 months whereas this figure is 34% in the least deprived areas.
6. Impact of increased cost of living on debt
17% of all adults had to borrow more money or use credit (overdraft, credit card or loan) than they did a year ago.
Adults who see a rise their cost of living have struggled financially as a result. The Opinions and Lifestyle Surveyor (OPN) asks several questions on borrowing, credit, savings and financial vulnerability. The responses then help understand financial resilience and whether different groups can absorb increases in their cost of living.
The trend in adults reporting that they could not afford to pay an unexpected, but necessary, bill of £850 has remained fairly stable from November 2021 at 27% to March 2022 at 29%. Those on lowest incomes (less than £20,000) and renters are unlikely to pay an unexpected, but necessary, bill of £850.
Question: Could your household afford to pay an unexpected, but necessary, expense of £850?
Figure 6: Adults on lower incomes were more likely to report their household could not afford an unexpected expense when compared with adults with an income of £50,000 or more per year
All adults in Great Britain, 6 January to 27 February 2022
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