A snapshot survey of people’s finances provides further evidence that the cost of living crisis remains for very many people, and household bills have increased by 23% over the past two years
Families are battling under the strain of a 23% surge in household bills over the past two years, research has revealed.
The average outlay on groceries has risen by 12% in that time, while insurance costs have surged by more than 50%. The findings, which include spending data from more than 2,600 people who earn under £40,000 a year as well survey results, confirmed that many households are still in the grip of the cost of living crisis.
While inflation has come down from its peak, the compounded impact of several years of price spikes has taken its toll. And in a new blow to households, inflation has started to pick-up again – rising to 3% last month – with a wave or bills increases, from energy and water through to council tax, set to increase in April.
The research from financial provider Vanquis found 44% of those surveyed said their financial situation had affected their mental wellbeing, with 21% having missed paying at least one bill last month.
More than four in 10 said they have had to work more hours to make ends meet, while 32% said they had taken on a second job. As a result, savings remain crucially low at just 1% of income.
Ian McLaughlin, Vanquis chief executive, said: “While incomes are rising, the relentless increase in essential costs is preventing many from building a financial cushion. This leaves households vulnerable to unexpected expenses and financial shocks. The challenge is turning small financial wins into long-term security. That means staying mindful of affordability, building good savings habits, and drawing on the right financial support at the right time.”
The Vanquis Financial Wellbeing Index found some improvement in the past few months, with incomes outpacing or closely matching their outgoings.
But rising expenses continue to challenge people’s “financial stability”, it found, with essential spending costs having grown 1% on the quarter, 10% year-on-year and 15% across the past two years.
On average, more than half of people’s income is taken up with essential outgoings, including mortgage, rent, insurance, council tax, energy and water bills.
