Nine in ten adults concerned about cost of living

Nine in ten (95%) of adults are concerned about the rising cost of living, with households across the earnings spectrum worried with  as much concern among those with six-figure incomes as lower-earners according to new research by mutual insurer, Royal London.

Women are the most worried, with a third (33%) mentioning they are extremely worried compared to a fifth (22%) of men.

The expense most Uhouseholds are concerned about is the rise in energy bills (92%), with three in ten (29%) being extremely worried about this, followed by food shopping (87%). Cost hikes to phone and internet contracts, which typically increase by the more than the Consumer Price Index (CPI) rate, concerns 84% of UK adults.

The level and speed of price rises, means nine out of 10 of us (89%) are looking to make changes to pay for the cost of living increases.

The option for a fifth (21%) of people is to borrow their way out of trouble, with 7% admitting they simply don’t know how they’ll cover increases and 5% of workers saying they are considering taking out a short-term (payday) loan.

Two-thirds (66%) of people say they will change their food shopping habits, with half of these saying they’ll reduce the amount of food they buy. Other solutions to cut back on costs include reaching for the thermostat and reducing the length of time the central heating is on (46%), turning off the heating in unoccupied rooms (36%) and nearly a fifth (17%) taking the drastic action of turning the heating off altogether.

As part of the cutting-back regime, half (48%) of full time workers feel they’ll be forced to reduce or stop saving altogether.

On top of rising costs, National Insurance contribution rates are also set to change from next month, just as energy bills rise more steeply, which will dramatically affect take home pay. For an individual on a salary of £50,000, that will mean an extra deduction of £464 a year, or £214 for someone earning £30,000. Worryingly a fifth of workers (20%) say they are not aware of these changes, and two fifths (43%) say whilst they are aware, they are not prepared for the changes to kick in.

Sarah Pennells, consumer finance specialist at Royal London, said “Just as families in the UK felt they’d seen the worst of the financial impact of Covid, they’re facing a dramatic rise in their household bills. People are having to make difficult choices in an attempt to reduce the impact of rising energy bills, higher inflation, tax hikes and potential interest rate increases. Understandably, this has made many people anxious about their finances, but it’s also testing their financial resilience.”

“Household bills are rising steeply, with the cost of filling up the car at the pumps having reached eye-watering levels leaving families up and down the country worried about their ability to make ends meet. Concern is so widespread that families who, on the face of it, would be considered financially comfortable and even those with six-figure incomes are deeply worried.”

“With rising prices on many fronts, next month’s rise in National Insurance payments will cause further concern. The move which creates an extra levy on earnings will hit middle-income earners hardest, with them paying a higher percentage of their salary than higher earners. Unfortunately, many are unaware of this forthcoming change. A fifth of workers said they weren’t aware and although a further two-fifths knew it was coming, they admitted that they weren’t prepared for it.”

Anna Stevenson, Senior Welfare Benefits Specialist at Turn2us, said “The findings from Royal London are deeply worrying and should not be overlooked. Millions of people are already being forced to make impossible choices in order to survive. This isn’t right. With the cost of living spiralling, we anticipate many more people will find themselves facing financial hardship over the coming months and will be in need of vital support.”