With the Office for National Statistics today confirming that annual inflation reached 9% in April, the Bank of England expecting it to reach 10% later this year, and the Bank of England Governor suggesting “apocalyptic” inflation pressure arising from food shortages, StepChange Debt Charity data shows that inflation is increasingly a driver of debt for people seeking debt advice. Among StepChange clients, the cost of living is now the third most commonly cited reason for their debt.
Wider survey data commissioned from YouGov by the charity in March reveals how worried people in Great Britain are feeling about the risk of debt arising from inflation. When asked how worried people felt about their own financial situation in light of the rising cost of living, only 5% said they were not worried at all. 24% were worried and felt they were likely to go into debt as a result but would be able to cope, while 11% felt they were likely to incur debt that they would not be able to repay.
Commenting on the rapidly escalating problem of inflation for people experiencing problem debt, StepChange Director of External Affairs Richard Lane said:
“The widening gap between people’s incomes and the cost of their essential spending is opening up problematic fault lines in household finances and contributing to debt problems, especially for lower income households whose budgets have little ability to flex.
“While we don’t doubt that policymakers are aware of the problem, at present the measures being taken to plug the gap are simply not sufficient to help many households avoid incurring debt as a result of the rising cost of living.
“We need to see targeted support specifically aimed at those households whose budgets don’t have the bandwidth to absorb higher costs – such as people on low incomes and relying on social security for some or all of their income, and those with vulnerabilities that mean they have specific needs and cannot cut their spending in areas such as energy or food. These groups are already over-represented among those experiencing problem debt, and there is no time to lose if their financial situation is to be prevented from worsening drastically over the coming months.”
StepChange urges anyone worried about the rising cost of living to explore the support available – the charity’s cost of living hub is a useful starting point.
Notes to Editors
- All survey figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1,676 adults. Fieldwork was undertaken between 11th - 13th March 2022. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
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