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Struggling households dip into savings to fund soaring cost of living

Data released by the Office for National Statistics shows 25% of people whose cost of living had increased in the last month are using their savings to fund the rise.

Two in three people surveyed by the Office for National Statistics said their cost of living has increased in the last month.

Fuel prices, the cost of groceries, and electricity bills were the main causes of the strain on their budgets.

Of those who had seen a cost of living increase, 25% reported dipping into their savings because of it, and the same proportion said they were now spending less on food shopping and essentials.

This comes as Small Business Minister Paul Scully was challenged by Sky News this morning about the pressures on household budgets.

He said the government was working with energy companies and regulator OFGEM to see what they could do to provide immediate help to those struggling.

“We know that the energy prices are an issue,” he said, and “that people are worried about cost of living in general. That’s why we announced the biggest cash increase in the National Living Wage since its inception…that’s why we changed the taper for Universal Credit.”

Labour is calling on the government to immediately scrap VAT on energy and fuel bills.

Speaking to Sky News, shadow justice secretary Steve Reed said the situation was “absolutely terrifying”.

“We’ve got the highest rate of inflation for nearly 30 years,” he added.

“This spring we’ll have the highest rates of personal taxation for 70 years and we’re going through the worst decade for wage growth since the Great Depression of the 1930s and on top of that people are seeing their fuel bills and heating bills going up.”

The data also reports that 14% of those who had seen a rise in their costs were using credit more than usual, for example, credit cards, loans or overdrafts.

Bank of England figures released this week show November was the biggest monthly increase in credit card borrowing since July 2020.

The Bank of England raised interest rates last month to combat rising inflation expectations.

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