Cost of living crisis: four in ten Britons expect their finances to get worse in next 12 months
Fuel, groceries and energy prices are on the rise, with the vast majority of Britons noticing price increases
Britain’s cost-of-living crisis has hit the country hard, with inflation at its highest level in three decades, petrol prices spiralling, retail price increases rising to their highest levels in 10 years and, most recently, Ofgem announcing a 54% price hike in energy bills affecting 22 million households. Chancellor Rishi Sunak has been forced to announce an emergency £350 of support per household to help with the cost of heating.
A new YouGov survey reveals that the vast majority of Britons have noticed price increases in their fuel costs, energy bills and groceries.
Price increases: where are Britons noticing rising costs?
The exponential rise in energy costs, including gas and electricity, has dominated the news headlines in recent weeks, and more than half of Britons (54%) say they have noticed a major increase in the cost of energy in the last few months, with a further 20% saying they have noticed a moderate increase and 7% a minor increase. In total, that’s 82% of the British public who have noticed an increase in the cost of their gas and electricity bills.
The proportion of Britons who consider the recent increase in energy costs to be “major” is unaffected by income – 56% of those with a combined household income of less than £15,000 per year say they have noticed a major increase in gas and electricity prices, compared with 54% of those making over £70,000.
The British public have also noticed their weekly grocery shop is also becoming more expensive, as inflation and supply chain issues combine to stack up costs for consumers. A staggering 85% of Britons have noticed an increase in the costs of groceries, although this is split more evenly than energy bills, between 22% saying a major increase, 42% a moderate increase and 21% a minor increase.
Oil and gas giant Shell has seen its income quadruple this year amid soaring fuel prices. Three-quarters of Britons (74%) have seen an increase in the cost of fuel in recent months, made up of 42% who say a major increase, 24% a moderate one and 8% minor.
Two in five (42%) Britons say they have noticed an increase in the price of clothes, while 35% say their housing costs, including rent and mortgages, have risen.
How are Britons’ finances now, and how do they expect their finances to change in the next year?
Overall, just 5% of Britons describe themselves as being ‘very comfortable’ financially. Two in five (39%) are relatively comfortable, while a third (34%) say they can normally cover essential costs but don’t often have money for luxuries. One in seven (14%) say they can only just afford their costs and struggle to make ends meet, and 3% say they cannot afford their costs at all and often have to go without essentials, like food and heating.
Few Britons expect their finances to improve in the coming months, with 42% expecting their household’s financial situation to get worse this year, 32% saying no change, 13% better and 13% unsure.
Britons who are worse off are much more likely to say that their finances will continue to worsen. Six in 10 (58%) of those who can only just afford costs, or cannot afford them at all, expect their household’s financial situation to get worse this year, with just 9% of this group expecting their finances to improve. Around half (48%) of those who can afford essentials, but not luxuries, expect their finances to take a dip over the next 12 months, falling to a third (34%) of those who are very or relatively comfortable financially.
Similarly, half (50%) of Britons with a combined household income of less than £15,000 per year expect their finances to deteriorate, compared to 30% of those making over £70,000.
However, although Britons are pessimistic about the future, the majority (62%) say their financial situation has not changed in the last month. Three in 10 (28%) say their household finances have got worse in the last month, while just 6% have seen an improvement. Those on lower incomes appear to be feeling the financial strain most, with those with a combined income of under £15,000 a year much more likely to say their financial situation has got worse (34%) than those with an income of more than £70,000 a year (19%).
Price increases which seem minor to financially comfortable Britons are very major for those who are struggling to cover costs
A price increase of 1.5% in the weekly shop might seem minor to some, but for Britons who are struggling to cover costs, it can be a serious blow to their budget. Poverty campaigner Jack Monroe recently announced her intention to create the ‘Vimes Boots Index’, named after a character from Terry Pratchett’s Discworld, as an alternative to the standard CPI and RPI to more accurately reflect the price creep in basics and value products, an increase which predominantly affects low-income households.
This phenomenon is borne out by our research – while 15% of financially-comfortable Britons say the price of groceries has seen a ‘major’ increase in the last few months, this rises to a third (36%) of those who say they can only just afford costs or cannot make ends meet at all. Similarly, a quarter (24%) of Britons who are ‘very’ or ‘relatively’ comfortable say they have seen a ‘minor’ increase in the price of groceries, compared to just 16% of those struggling financially.
This split is also seen in energy bills – half (50%) of Britons who are comfortable financially consider the increase in the cost of gas and electricity over recent months to be ‘major’, compared to two-thirds (68%) of those who struggle to cover their costs.
See full results here