Interactive Investor

Keeping a lid on spending now a daily battle for most

30th March 2022 10:55

Myron Jobson from interactive investor

interactive investor comments on ONS cost of living research.

  • 83% of adults reported an increase in their cost of living in March 2022 (3 to 13 March 2022), according to new data by the Office For National Statistics (ONS)
  • This compares with around six in 10 (62%) adults in November 2021 (3 to 14 November 2021).
  • Nearly three out of 10 (29%) adults reported that they could not afford an unexpected, but necessary, expense of £850 (6 January to 27 February 2022).
  • Older adults were more likely to report that their cost of living has increased compared with younger adults

Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The ONS data lays bare the true scale of the cost-of-living crisis which has laid waste to household budgets.

“Prices are rising at rates we have not seen in decades and keeping a lid on spending is now becoming a daily battle for many – especially for the nation’s most cash-strapped individuals who simply do not have any more wiggle room to tighten their financial belts further.

“The fact that three in 10 UK adults cannot afford an unexpected, but necessary, expense of £850 suggests that many have already raided their cash buffer pots to maintain financial buoyancy - and as lockdown savings evaporate, this figure could climb higher.

“Even landlords have been identified by the ONS as being among the group, which includes parents, disabled adults and divorcees, who would struggle to afford an unexpected expense of £850. With rents surging to a 13-year high, increasing by 8.3% at the end of 2021*, it is clear that the cost-of-living hit to landlords is having a trickledown effect on tenants who face cost of living pressures of their own.

“While no one is immune from the rising prices, older adults, particularly those approaching state pension age, are feeling the most - which might force them to delay retirement plans until they are confident that they have saved enough to live comfortably on.

“The cost-of-living squeeze has been a reality for many before the months covered in the ONS research. It’s been a case of ‘out of the frying pan and into the fire’ for those who experienced a dramatic fall in income because of the pandemic and now face further financial hardship amid the soaring cost of living.

“The effectiveness of personal finance tips and hacks, such as shopping around for the best deals and switching to own-label brands when grocery shopping might feel like limited tools - but are still very much worth doing to help shore up you financial decision.

“It is worth keeping a spreadsheet of your own spending habits so that you can get a better idea of the goods and services that are eating most into your budget, and where you could cut back. If you don’t have a budget, now is a good time to start one.”

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