The number of households missing essential payments has risen to 2.4 million – in line with the high levels seen last winter – as the Bank of England looks poised to raise interest rates again tomorrow.
Which?’s July consumer insight tracker found that 2.4 million households missed or defaulted on an essential payment – such as a housing, bill, loan or credit card payment – in the month to July 13th.
This is significantly higher than the number who missed essential payments in May and in line with the high numbers missing payments last winter – showing that the cost of living crisis is continuing to bite into household finances, even in warmer weather when energy costs are lower.
Of these missed payments, 1.5 million households missed or defaulted on a household bill payment – such as an energy, water or council tax bill – in the month to July 13th. Worryingly, two-thirds of those who missed a household bill payment reported that they missed more than one household bill payment.
Water and energy were the most commonly missed household bills. Of those who missed a household bill payment, almost half missed a water bill, around half an energy bill, four in 10 a phone bill and around a third a council tax payment.
Which?’s consumer insight tracker also estimates that 770,000 households missed or defaulted on a housing payment in the month to July 13th – with one in 20 renters and 3.4 per cent of mortgage holders missing a housing payment.
Almost six in 10 of households reported making at least one adjustment – such as cutting back on essentials, dipping into savings, selling possessions or borrowing – to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month. This equates to an estimated 16.7 million households.
drop in consumer confidence in both their own household’s situation and the UK economy was observed in the month to July 13th. This followed the release of May inflation figures in late June showing inflation being more persistent than expected, leading to a further jump in interest rates and the removal of some mortgage products from the market.
Consumers’ level of confidence in their current household situation fell 16 points in the last month to +9 in the month to July 13th – down from +25 in the month to June 9th.
Less than a fifth of consumers said they think their household financial situation will get better over the next 12 months, whilst four in 10 said they think it will get worse, giving a net confidence of -20.
Confidence in the UK economy over the next 12 months dropped 16 points to -47 in the last month – with 14% of consumers thinking the UK economy will get better and 61% believing it will get worse.
With the Bank of England predicted to raise interest rates again tomorrow, pressures on household finances are only set to increase. At such a difficult financial time, businesses must do everything in their power to ease pressures on household budgets.
Which? is calling on essential businesses – energy firms, broadband providers and supermarkets – to do more to help their customers and ensure they are providing value for money.
For example, supermarkets need to make budget line items widely available, particularly in convenience stores, energy firms need to ensure their customer service departments are fully staffed and able to support any customers who are struggling to make ends meet and telecoms firms need to properly advertise their social tariffs to eligible customers.
If people are missing or struggling to afford essential payments – such as energy, credit card or mortgage payments – then they should speak to their provider immediately for help.
Rocio Concha, Which? Director of Policy and Advocacy, said:
“Our research has found that the number of households missing essential payments has risen to 2.4 million – in line with the high levels seen last winter – showing that though inflation might have peaked, the human cost of the cost of living crisis continues to rise.
“With interest rates predicted to rise again tomorrow, these pressures on household finances are only set to increase. We’d encourage anyone who’s struggling to seek free debt advice and reach out to their bill provider for help.
“As so many people face financial hardship, Which? is calling on businesses in essential sectors, like food, energy and telecoms, to do more to help customers get a good deal and avoid unnecessary or unfair costs and charges during this crisis.”
