Three quarters of a million more households struggling with finances. The latest MoneyMood Survey shows one in eight homes (12.6 percent) are struggling to make ends meet, up from one in ten last year.
The number of homes who say they are “struggling” (i.e. income not enough to pay bills) has risen by 756,000 to 2.6 million in January 2014, up from 1.9 million in January 2013. The research also indicates that, for those households whose earnings do not cover bills and debts, their monthly shortfall is worse than a year ago. We asked those homes who are struggling to pay bills how much their earnings fall short each month. The latest figures show the average monthly shortfall (for those households who say they can’t afford to pay bills and debts) is £85 across the UK, double the figure recorded in January 2013 (£42). Regionally the figures tell a similar story with nearly all regions showing a worsening monthly shortfall for homes struggling to pay bills and debts.
Commenting on these findings John Pollock, Chief Executive Officer, Legal & General Assurance Society said; “Despite January inflation falling below two percent for the first time in 10 years, our MoneyMood survey shows we are not yet seeing any strong signs of recovery in household finances. Gas and electricity costs are not yet showing signs of coming down and this may be a key factor in holding back improvement of household finances. The ONS reported that the cost of gas and electricity has been one of the largest contributors to inflation over the last 27 months*.
Two key measures in our latest MoneyMood indicate more homes are worse off compared to January 2013. Firstly the number of homes who are struggling to make ends meet has risen significantly year on year. In January 2014 three quarters of a million more homes are struggling to avoid sinking into debt than at the start of 2013. The second measure is that, for those families whose earnings do not cover paying bills and debts, the average shortfall has doubled to £85. In some regions it’s even higher. It’s likely the cost of gas and electricity will continue to be a key factor in determining the strength of household finances for some time to come.”
* Source – ONS Consumer Price Indices, January 2014 – ‘In 24 out of the last 27 months, prices in the housing, water, electricity and gas & other fuels sector have been the largest contributor to the inflation rate and currently account for a quarter of inflation.’ The Consumer Prices Index (CPI) grew by 1.9 percent in the year to January, down from 2.0 percent in December 2013.
