2.3m households missed an essential payment in January

Around 2.3 million households missed an essential payment in January, an increase of 400,000 on the month before, but similar to previous years according to new research by Which.

The research found that 2.3 million households missed or defaulted on at least one mortgage, rent, loan, credit card or bill in January 2023. This marks an increase on December 2022, when 1.9 million households were estimated to have defaulted on or missed a payment. Missed payments typically peak in January, and this year’s missed payment rate is similar to the past two years.

Six in ten (59%) made at least one financial adjustment – such as cutting back on essentials, selling items or dipping into savings – in the last month to cover essential spending. This equates to an estimated 16.5 million households.

This is a significant increase on the four in 10 (49%) seen this time last year, but lower than the peak of two-thirds (65%) making adjustments in September 2022. The increase in the proportion making adjustments to cover essential spending is largely driven by more households cutting back on essentials – such as utility bills, housing costs, groceries, school supplies and medicines.

The number of households cutting back on essentials has increased by 11 percentage points from three in 10 (27%) last January to four in 10 (38%) this January.

Which? also analysed Office of National Statistics data and found that different household types and income groups experienced different levels of inflation in 2022.

In 2022, the households on the lowest incomes experienced much steeper increases in inflation – peaking at an estimated 11.5 per cent in October 2022. This was nearly 3 per cent higher than the estimated inflation rate for the highest income group (8.6%). This is the largest inflation gap Which? has estimated between income groups since its lived inflation estimates began in 2016.

Single parent and retired households have experienced a particularly high lived inflation rate compared to other family types because they spend a greater proportion of their budget on food, energy and fuel, which have all seen large price hikes during the cost of living crisis.

Rocio Concha, Which? Director of Policy and Advocacy, said “With 2.3 million UK households missing payments in January and those on the lowest incomes being hit hardest, consumers will need more support than ever in 2023.”

“As the cost of living crisis continues to bite into household finances, we are calling on businesses in essential sectors – like food, energy and broadband providers – to do more to help customers get a good deal and avoid unnecessary or unfair costs and charges.”