Almost 90% of British households reported an increase in their cost of living last month as they were hit by escalating fuel, food and borrowing costs.
Heaping further pressure on Rishi Sunak to increase his support for those on low and middle incomes, the Office for National Statistics said a quarter of all those in its survey were struggling to pay their bills and 17% had turned to loans or borrowing on credit cards to make ends meet.
Debt charities and anti-poverty campaigners said the figures were a shocking reminder that this year households face the biggest cut in their living standards since the 1950s. Jack Leslie, a senior economist at the Resolution Foundation thinktank, said the combination of shrinking pay packets and rising costs meant that the pressure on households was building.
The figures cover the last two weeks of March, before households felt the impact of April’s cost of living rises when the cap on household energy bills went up by 54% and national insurance contributions increased by 1.25 percentage points.
The ONS said that while rising bills affected most households across the country, “they are more likely to disproportionately affect those in the most deprived areas”.
More than a third of the most deprived fifth of households in England had found it difficult or very difficult to pay their usual bills.
“This [situation] is set to get worse, with the estimated number of households experiencing fuel stress hitting 5 million this month,” Leslie said.
“Going forwards, the government must do it all it can to protect those who will be hardest hit – with support for low-income households a priority.”
Labour said the crisis facing millions of families meant Sunak should hold an emergency budget. It said its own analysis had found that the annual cost of running the nation’s petrol and diesel cars had jumped by £10bn since April 2021.
The shadow transport secretary, Louise Haigh, said the 5p cut in fuel duty, one of Sunak’s main policy initiatives as chancellor to alleviate the impact of rising prices, had been “swallowed up by the soaring cost of fuel over the year”.
She added: “The government needs to set out an emergency budget to tackle its cost of living crisis – and support Labour’s call to put money back in the pockets of working people.”
Haigh said Labour would scrap the recent increase in national insurance and implement a tax on North Sea oil and gas producers that would raise enough to cut about £600 off the average household heating bill.
Commenting on the ONS data, Helen Morrissey, an analyst at the stockbroker Hargreaves Lansdown, said it was likely that poorer households were “burning through their lockdown savings in a bid to meet their day-to-day living costs while others opt to borrow more to meet their needs”.
She added that while many mortgage payers have fixed their borrowing costs in recent months, “those who rent will feel very exposed to further increases in the coming months”.
Earlier this month the property website Rightmove said private rents were rising at a record rate, and prospective tenants outnumbered available rental properties by more than three to one.
Wages have risen in recent months but have failed to keep pace with rising prices as employers attempt to keep costs in check. Last month inflation soared to 7%, its highest level in 30 years in March, driven by the rising cost of gas, petrol, food, footwear, furniture and clothing.
On Monday, UK manufacturers reported in the latest monthly survey that the cost of raw materials and energy was rising at the most rapid pace since 1979. In turn, the growth in prices they are charging consumers is rising at its fastest since 1979, with a further acceleration expected in the next three months.
The ONS said that among those who pay energy bills, about four in 10 (43%) reported that it was very or somewhat difficult to absorb the higher costs in March, even before the latest price cap increase in April.
Illustrating the growing divide between the poorest areas of England and the wealthiest as the cost of living crisis worsens, more than half of adults (57%) living in the most deprived places reported difficulty in affording their energy bills compared with about a third of adults (35%) in the least deprived ones.
Sunak has claimed he is spending £22bn to alleviate the pressure on households, mainly through a 5p cut in fuel duty and a reduction in gas bills via a £150 council tax rebate that has already taken effect and £200 cut in October, although this is a loan that must be paid back over the subsequent four years.
