Spending

Seven out of 10 are cutting spending in the crisis | United Kingdom | New

Struggle…households face growing battle to make ends meet (Image: GETTY)

Three-quarters are worried about the state of the economy and 68% are making budget cuts, figures from the Office for National Statistics (ONS) have revealed. And more than half of UK households have reduced their energy use in response to soaring inflation and a rising energy cap that is driving up bills.

Eighty-two percent of people aged 30 to 49 – who are most likely to be raising children and paying mortgages – and 77% of people aged 50 to 69 say they are worried.

And 70% of people over 70 admitted they felt worried or “very worried” about paying their bills.

Caroline Abrahams, from the charity Age UK, said: “Our own analysis shows the stark impact that soaring prices are having on our elderly population.

“I’m amazed that the bad news about prices keeps coming in, but the government keeps doing nothing.

“And from what we hear, many older people are also surprised and disappointed. There must be more ministers can do to help.”

She added: ‘For older people on low fixed incomes, who rely solely on their pension and public benefits, it’s a terrifying prospect, because they simply can’t make any more cuts.’

People earning less than £10,000 a year accounted for the highest percentage of people feeling very worried, at 31%, according to the ONS.

The new state full pension is £179.60 per week – £9,339.20 per year. People who reached statutory retirement age on or before 5 April 2016 and fall under the old system receive just £137.60 a week.

Bestinvest personal finance analyst Alice Haine said: ‘Poorer households, such as those with a gross personal income of less than £10,000 a year, ‘feel very worried’ about their finances.

“For some, the reality is already much grimmer, with families giving up non-essential things to pay bills, canceling vacations, missing bill payments – and some parents are even skipping meals to make sure their children can eat.

“The fear is that these tough decisions will only multiply when the impact of higher energy bills finally kicks in later this year.”

Ms Haine warned: “Warmer temperatures in the summer months mean that households currently do not need to heat their homes, so the real hit will come in the winter months, just in time for the next rise. energy prices.

Overall levels of worry tended to be similar despite different income levels, but those earning over £50,000 were the least worried.

In its survey carried out between May 25 and June 5, the ONS said that 52% of people were using less gas and electricity at home, following major price increases.

He also noted an increase in the number of people spending less on food purchases and basic necessities, which rose to 41% of households from 36% a fortnight ago.

The ONS report said: “Looking at other sources of data, we can see further evidence that people are changing their behavior which could be linked to the rising cost of living.

“Our Economic Activity and Social Change in the UK Real Time Indicators release showed that between early and mid-May 2022, credit and debit card purchases in the UK declined by six percentage points, as measured by CHAPS data from the Bank of England with the previous week.

“Data from OpenTable also showed that seated diners decreased by 10 percentage points, while data from Google Mobility recorded that people visiting retail and leisure venues decreased by 3%.”

The figures come after consumer price index inflation hit 9% in April, with further rises expected this year.

Meanwhile, four in 10 people who say they are very concerned about the rising cost of living are using their savings to make up the budget shortfall.

Tom Selby, head of pension policy at investment firm AJ Bell, said: “There’s nothing wrong with that – coping with unexpected bills is what a fund for on rainy days.

“But it’s essential that those who are draining their savings today have a plan in place to rebuild them when their financial situation improves.”

COMMENT BY JAN SHORTT

The ONS cost of living figures come as no surprise to members of the National Pensioners Convention.

The feedback we’re getting shows they’re struggling to make ends meet and are worried about rising costs this fall.

Contrary to many opinions, most seniors need to be careful with their budget.

Those who live on the state pension, or perhaps a small working pension bringing them just above the pension credit level, have no room for manoeuvre.

They also spend a much larger proportion of their income on essentials like food, energy and rent. Others are still paying mortgages.

Inflation is not as new to the over-75s as it is to younger age groups.

However, even the most resilient are collapsing due to unprecedented and still rising price levels.

All this at a time when the “triple lockdown” to ensure annual increases in the state pension – already greatly reduced in real terms – has been suspended.

The figures come after consumer price index inflation hit 9% in April, with further rises expected this year.

Meanwhile, four in 10 people who say they are very concerned about the rising cost of living are using their savings to make up the budget shortfall.

Tom Selby, head of pension policy at investment firm AJ Bell, said: “There’s nothing wrong with that – coping with unexpected bills is what a fund for on rainy days.

“But it’s essential that those who are draining their savings today have a plan in place to rebuild them when their financial situation improves.”

52% use less gas and electricity at home to save money 41% spend less on food shopping and essentials iact increase bills impact UK

Although the government has announced emergency measures, they are not enough to cover the huge bills that are coming in.

One-time payments have been delayed, so do not relieve the pressure on households today and tomorrow. Moreover, they do not take a long-term view of pensioner poverty, which is expected to worsen.

The NPC has written to chancellor and energy regulator Ofgem to suggest measures that could help alleviate the situation almost immediately.

First, reduce or eliminate VAT and unnecessary permanent charges on energy.

And permanently increase winter fuel allowance to £500.

Prevent energy companies from charging higher rates to those who are not online, or who cannot use direct debit, or who must use key card meters.

They’re not the whole answer, but they might help in the wait for a long-term solution that will end pensioner poverty.

  • Jan Shortt is general secretary of the NPC