Single parents face cost-of-living wipeout as inflation continues to mushroom

New ONS data reveals family finances were strained during the pandemic.

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “We are all feeling the effects of the biggest fall in living standards in generations, but the ONS data lays bare that many parents have been whipsawed by the inflationary storm.

“Single parents in particular are facing a cost-of-living wipeout as inflation continues to mushroom – fuelled by soaring energy bills. This group’s finances were strained before the cost of living skyrocketed. In the Covid-blighted 2020-21 tax year, single-parent households spent almost 90% of their after-tax income on typical household costs such as housing, groceries and energy, leaving just £57.40 remaining per week, on average. Two-parent households, on the other hand, spent 67% of their average disposable income, leaving £284.60 per week. This disparity is likely to have widened amid ballooning inflation.

“What’s worrying is parents are more likely to get into debt to maintain financial buoyancy amid rising prices – and the worse is yet to come. Soaring energy bills are set to reach new peaks once the higher energy price cap comes into effect in October, while inflation, more broadly, is set to accelerate.

“Soaring energy bills, food inflation and the higher petrol and diesel prices are pushing more and more household budgets to breaking point. Many parents with young children have to contend with an additional burden of a rising childcare bill, with nursery fees, snacks and even nappies on the up - threatening to push their finances to breaking point. For most parents, these costs take up a massive chunk of their 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 your financial decision.”

Key points:

• New ONS data found around nine in 10 (91%) adults reported their cost of living has increased over the last month and among these adults the most reported reasons were an increase in the price of food shopping (96%), gas or electricity bills (79%) and the price of fuel (71%).
• Around eight in 10 (81%) adults reported being very or somewhat worried about rising costs of living in the past two weeks. Nearly half of adults (47%) said they will not be able to save any money in the next 12 months. Nearly one in five (19%) adults reported they had to borrow more money or take out more credit in the past month compared with a year ago.
• More than four in 10 (45%) adults who pay energy bills found it very or somewhat difficult to afford them.