- Discretionary income sharply drops
- Energy, food prices surge
- Mortgage, rent costs increase
According to research conducted by the Nationwide Building Society, the proportion of individuals lacking discretionary income at the end of each month nearly doubled between 2022 and 2023.
From 2022 to 2023, the proportion of households with no cash remaining at the end of the month increased from 11% to 21%.
Nationwide reports that more than one-fifth of households, or 22%, have less than £100 remaining at the end of the month, up from 13% in 2021.
The data indicates that from 2021 to 2023, households’ mean monthly energy expenses rose by 63 per cent. Additionally, food and motor fuel costs experienced a monthly increase of more than 30 per cent.
The research indicates that average monthly mortgage payments have increased by 22% since 2021, while average monthly rental expenses have increased by 26%.
69% of households, burdened with astronomically high living expenses, are increasingly concerned about their financial situation and ability to manage the escalating costs.
According to Nationwide, the mean disposable currency balance experienced a consistent decline of £237 after each month by the end of 2023, from £328 in 2021.
According to the findings, the average monthly energy expenditure was £126 in 2021 and approximately £205 in 2023.
In contrast, monthly motor fuel expenses have increased by approximately 39% since 2021, reaching £121 in 2023.
Rising Costs Strain UK Households
Inflation for food prices peaked at more than 19 per cent in March 2023, establishing food price inflation as a significant concern in that year.
According to Nationwide, the average monthly food expenditure increased by 32% during the period, from £191 in 2021 to £213 in 2022 to £253 last year.
Numerous supermarket chains, including Sainsbury’s, Tesco, and the Co-op, have strengthened their in-store “loyalty pricing,” which guarantees specific reduced prices only to customers enrolled in the chain’s membership program.
Consumer organisation Which? Last year, they claimed that Tesco and Sainsbury’s employed “possibly dubious strategies” in some customer loyalty offers. Sainsbury’s and Tesco both denied the allegations.
In 2023, mortgage rates increased substantially before gradually declining in the fourth quarter. According to Nationwide, the average monthly mortgage payment increased by 22% over the period, from £722 in 2021 to £774 in 2022 to £880 in the previous year.
The mean monthly rental expenses ascended from £693 in 2021 to £752 in 2022. Tenants were assessed a monthly rental fee of £869 in 2023, an increase of 26% compared to the corresponding period in 2021.
Director of retail services at Nationwide, Mandy Beech, stated, “Many households continue to feel the pinch as costs remain historically high despite the deceleration in inflation.”
“Families have been hit especially hard, leaving them with very little disposable income at the end of each month.”
Nonetheless, indications of heightened optimism among households are present.
Sixty-seven per cent, or two-thirds, of the respondents, said they had adapted to the cost-of-living crisis either moderately well or very well, and more than fifty per cent said they could meet their financial obligations despite the tight conditions.
The information came from a survey of 2,000 individuals.
If you find it challenging to meet your monthly financial obligations, contacting your bank or building society may be beneficial to determine how they can assist.
On Thursday, as it holds its most recent vote on interest rates, the Bank of England’s Monetary Policy Committee will be the centre of attention as many individuals struggle with high prices.
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The Monetary Policy Committee (MPC) of the Bank maintained interest rates at 5.25 per cent for the third consecutive month by a vote of six to three.
According to a survey conducted by the US bank Citi and the market research firm YouGov, the public’s anticipation of inflation for the next 12 months decreased from 4.2 per cent in October to 3.5 per cent in November and December.
New data released on Tuesday revealed that January shop inflation reached its lowest level in nearly a year, as the price of milk and tea decreased and retailers offered steep discounts to attract customers.
As per the British Retail Consortium-NielsenIQ Shop Price Index, in-store prices’ annual increase decreased from 4.3 per cent in December to 2.9 per cent in January. It has been a lot higher since May 2022.
