Credit, Collections & Insolvency News
Soaring rises in the cost of food and drink are fuelling ongoing high inflation and causing hard-pressed UK households to need to rely more on credit products.
Keeping up with the most everyday basic needs appears to be proving more and more challenging for households across the UK, forcing many to make stark spending choices or resorting to accessing financial options they may not otherwise have considered. In the year to March 2023, the price of food and drink rose at its fastest rate in over 45 years, 19.1%, up from 18.2% in the year to February 2023.
These ongoing rises have been a significant factor in the overall inflation rate having increased to 10.1% in the year to March 2023, albeit down 0.3% from the year to February. However, these significant increases still aren’t the highest rate of inflation seen in the 12 months to March 2023, which was housing, water, electricity, gas and other fuels at 26.1%.
With food prices rising alarmingly, many consumers are being seen to be resorting to using credit to cover these costs. 70% of Buy Now Pay Later users report that they are paying through these means more often as a direct result of the cost of living crisis. With many BNPL operators now actively promoting paying for groceries, takeaways and drinks this way, more consumers are following suit. While a range of payment options increases consumer choice, broadly a positive principle, research is currently showing that 24% of BNPL users are missing monthly repayments, suggesting a problematic crossover between affording basics and taking on unsustainable debt.
Organisations supporting people with food needs report a similar picture, with the Trussell Trust saying in their latest available figures that between April and September 2022, their network distributed 1.3 million food parcels, a 52% increase on the same period in 2019.
Affording what should inarguably be the most basic of everyday needs is becoming ever more difficult for far too many UK households and, as has often been said, it feels that this should be unthinkable. But increasingly, these problems seem to be the norm, rather than the exception they should be.
Households taking on additional, unmanageable debt is never a good thing, but when this is being done to afford life’s essentials, the need for change becomes pressing. It’s clear that urgent action needs to be taken to arrest these deeply concerning trends if the UK is to take further, progressive steps towards greater Financial Wellbeing for everyone.
