Less than a quarter (24%) of people, according to StepChange, are in a good financial situation coming into the holiday season, compared to over half (45%) in 2021.
According to a debt charity, the proportion of people who say they can easily afford Christmas this year has nearly halved, and more people are resorting to credit.
Less than a quarter (24%) of people, according to StepChange, are in a good financial situation coming into the holiday season, compared to over half (45%) in 2021.
According to the research, the findings of its poll reflect the rise in the cost of living in 2022.
Currently, inflation is at a 41-year high of 11.1%, and earnings growth is not keeping pace.
The primary drivers of the economy have been energy-related, as the cost of producing commodities, including food and services, has skyrocketed and household power and gas bills have reached record highs in the wake of Russia’s invasion of Ukraine.
StepChange expressed concern over Christmas spending on credit goods, as 61% of those surveyed by YouGov intend to purchase holiday gifts with a credit card.
Over a third of borrowers anticipate using their overdraft, while forty percent aim to utilize Buy Now, Pay Later (BNPL) providers.
The Bank of England has been increasing interest rates throughout 2022 to combat inflation, placing more burden on family finances in the process.
The Bank’s figures have not yet revealed an increase in unsecured borrowing, but the charity predicts that the holiday season will entice consumers towards it.
StepChange cautioned against spending above one’s means, as rentals, mortgages, and even heating costs were already proving difficult for many and may climb higher.
StepChange’s director of external relations, Richard Lane, stated: “Christmas can be a lovely time to enjoy with family and friends, but it can also be a financial burden for many who feel pressured to spend more than they can afford.
“This year, with household budgets already stretched to the maximum by the cost of the living problem, consumers may be more susceptible to being enticed into utilizing short-term credit products that are frequently touted as a means of financing a joyful Christmas.
Because inflation shows no indication of abating and energy costs are expected to continue rising until 2023, taking out expensive credit during the holiday season may result in a debt hangover in the New Year that is tough to overcome.
