Millions of Brits plunged into financial crisis by whirlpool of inflation and swelling energy bills
Swelling energy bills, soaring inflation and stinging food costs have plunged millions of Brits into a winter financial crisis, reveal new figures released today.
3.2m poorer households who rely on wafer thin budgets to meet the cost of living will be unable to pay for basic things, research by Citizens Advice, the charity that supports households experiencing financial turmoil, has found.
Brits living on a minimal budget would need to take on debt to cover their expenses or cut back on spending on essentials such as rent, bills and food.
According to the charity, a debt crisis is already sweeping through the UK.
The new study underlines the scale of the financial hit households are having to absorb from entrenched inflation in the UK economy. It comes after the Covid-19 crisis let rip on household finances.
The Office for National Statistics (ONS) said last week prices are 4.2 per cent higher than they were a year ago in October, the highest inflation print in nearly a decade.
Lalitha Try, a researcher at the Resolution Foundation, who primarily focus on low to middle income households, told City A.M.: “While some workers will be getting bumper pay rises from firms desperate to recruit staff, everyone will be hit by rapid increases in the cost of living this winter, with rising energy bills likely to be a particular pressure point.”
A looming 1.25 percentage point national insurance hikes will squeeze Brits even more.
Prices for essential goods such as energy have soared, crimping households’ real incomes.
Gas and electricity prices climbed more than 28 per cent and 18 per cent respectively last month, according to the ONS.
Poorer households are impacted more severely than richer households when prices for basic necessities rise as they represent a larger share of their income.
The UK energy regulator hiked a cap on the amount providers can charge households by 12 per cent last month, increasing millions of Brits’ energy bills.
Dame Clare Moriarty, chief executive of Citizens Advice, said: “All of us are noticing our bills go up, but for people on the tightest budgets there’s simply nothing left to cut back on.”
“Many are getting into debt and finding that accessing crisis support like food banks is the only way to get by.”
Citizens Advice’s damning research comes as separate data released by Ipsos MORI yesterday revealed Brits do not expect the cost of living crisis to ease, with six in 10 thinking the economy is in a dire state.