‘THE squeeze is on for nine million households’, says consumer organisation Which?
The latest Which? Quarterly Consumer Report reveals that 1.5 million more families are feeling financially squeezed than a year ago.
Which? found that ‘a third of families (34%), nine million households, are feeling squeezed, up from 7.5 million households in July 2012.’
It added that despite ‘increased consumer confidence, only a quarter of people (25%) expect their own personal financial situation to improve and three in ten people (30%) continue to cut back on essential spending.’
Which? warned: ‘The reality is that households are facing huge inflation on essentials, with food prices up by 4.3%, and gas and electricity bills up by around 8%.
‘In the last year, two-thirds of the population (65%) have said that the economy is negatively impacting on their personal finances.
‘The last month has also seen the biggest drop in consumer spending power following nine months of previous continuous growth. Overall spending power is down 0.9% year on year.’
It warned ‘that people are relying more on savings or credit to get by.
‘Our figures show that in the last year, on average, each month 6.1 million households dipped into savings to cover their monthly spending, 4.7 million households relied on their overdraft, and one million used an unauthorised overdraft.’
The survey found that on average over the last 12 months, each month: 7.8 million households cut back spending; three million households needed to borrow money from family and friends; 1.3 million households took out a new credit or store card; one million households took out a payday loan.
The Which? Consumer Insight Tracker also finds:
At the moment just 40% of people describe their finances as ‘good’.
On average over the last year more than eight in ten consumers have been worried about energy and fuel prices and seven in ten worried about food prices.
The 30-49 age group is most affected by the financial squeeze, while under 30s have seen the biggest decline in spending power.
One in five people have no savings, as paying off debt is seen as a higher priority.
l UK government public sector borrowing has increased to £12.4bn in June, up £500m on the same month last year, The Office for National Statistics (ONS) has revealed.
The amount of borrowing, excluding distortions such as bank bailouts and quantitative easing (QE), hit £12.4bn which marks a slight rise from the £11.9bn in June last year, the ONS said.
The current public borrowing is yet another blow to Chancellor Osborne’s plans to reduce budget deficit, as it shows he is making no headway in bringing the deficit down in 2013-14.