The Rising Cost Of Living And Its Impact On Individuals In Great Britain: November 2021 To March 2022

26th April 2022

Around 9 in 10 (87%) adults reported an increase in their cost of living over the previous month in March 2022 (16 to 27 March 2022), an increase of 25 percentage points compared with around 6 in 10 (62%) adults in November 2021 (3 to 14 November 2021).

Nearly a quarter (23%) of adults reported that it was very difficult or difficult to pay their usual household bills in the last month, compared with a year ago, in March 2022 (16 to 27 March 2022); an increase from 17% in November 2021 (3 to 14 November 2021).

Focusing on the latest period, among those who pay energy bills, around 4 in 10 (43%) reported that it was very or somewhat difficult to afford their energy bills in March 2022 (16 to 27 March 2022).

Of adults currently paying off a mortgage and/or loan, or rent, or shared ownership, 30% reported that it was very or somewhat difficult to afford housing costs, and 3% claimed to be behind on rent or mortgage payments, in March 2022 (16 to 27 March 2022).

Among all adults, 17% reported borrowing more money or using more credit than they did a year ago, in March 2022 (16 to 27 March 2022).

Among all adults, 43% reported that they would not be able to save money in the next 12 months, in March 2022 (16 to 27 March 2022); this is the highest this percentage has been since this question was first asked in March 2020 (27 March to 6 April 2020).

Between 16 March and 27 March 2022, the most common reasons reported by adults for increased cost of living were an increase in:
the price of food shopping (88%)
gas or electricity bills (83%)
the price of my fuel (77%)

Difficulty paying household bills
Higher energy and housing costs have resulted in more adults reporting some difficulty in paying usual household bills compared with a year ago. During 16 to 27 March 2022, 23% of adults found it very difficult or difficult to pay usual household bills in the last month compared with a year ago, up from 17% in the period 3 to 14 November 2021.

In March (16 to 27 March 2022), the proportion of adults living in the most deprived areas of England who reported that they found it difficult or very difficult to pay their usual household bills, was 9 percentage points higher than in November 2021 (3 to 14 November 2021), increasing from 25% to 34%. This compares with an increase of 7 percentage points in the least deprived areas of England, increasing from 10% to 17%.

During 16 to 27 March 2022, a greater percentage of renters (37%) found it very difficult or difficult to pay usual household bills compared with a year ago, compared with mortgagors (23%). Property renters are more concentrated in the lower income quintiles than mortgagors and have the potential to be affected more by changes in their cost of living. This might explain why renters were more likely to report some difficulty in paying household bills.

From the periods 3 to 13 March and 16 to 27 March 2022, additional questions were added to the Opinions and Lifestyle Survey (OPN) to gather more detailed information on the impacts of higher energy bills and housing costs. The questions asked on how easy or difficult it was to afford recent energy bills and housing costs cover the latest period. They differ slightly to questions that ask the difficulty in paying household bills compared with a year ago, therefore these results are not strictly comparable.

Energy bills
Between November 2021 (3 to 14 November 2021) and March 2022 (16 to 27 March 2022), the second most common reason reported by adults for increased cost of living was an increase in the price of gas or electricity bills. In the most recent period 16 to 27 March 2022, this was at its highest, at 83%.

These data were collected prior to the increase in the domestic energy tariff cap on 1 April 2022, which sets the maximum amount at which suppliers can charge customers on default tariffs and is updated every six months. The data in this article relate to the period in which there was a 12% rise in the Office of Gas and Electricity Markets (Ofgem) energy price cap. Our previous analysis shows the extent to which those on lower incomes may be disproportionally affected by rising energy prices. The latest OPN data covering the period from 13 to 24 April 2022 will be released on 29 April 2022.

Among those who pay energy bills, around 4 in 10 (43%) reported that it was very or somewhat difficult to afford their energy bills in March 2022 (16 to 27 March 2022).

During the same period, among those who pay energy bills more than half of adults (57%) living in the most deprived areas of England reported difficulty in affording their energy bills compared with around a third of adults (35%) in the least deprived areas of England.

Among those who said they have gas or electricity supplied to their home, 6% reported they were behind on their gas or electricity bills in March 2022 (16 to 27 March 2022). When comparing across personal characteristics, those living in the most deprived areas of England were more likely (13%) to report being behind on gas or electricity bills than those living in the least deprived areas of England (4%). In addition, a greater proportion of renters (13%) reported being behind on energy bills compared with only 3% of mortgagors and 2% of those who own their home outright.

Since December 2021 (15 December 2021 to 3 January 2022), among adults who reported their cost of living had increased, respondents were also asked about their actions in response to increased cost of living. The largest increase in any coping method was using less fuel such as gas or electricity. This increased from 28% (15 December 2021 to 3 January 2022) to 45% (16 to 27 March 2022).

There are strong seasonal spending patterns relating to gas and electricity that may affect the results presented in this section.

Housing costs
Housing costs have also been a growing contributor to reported increases in the cost of living. In March 2022 (16 to 27 March 2022), 34% of renters reported their rent had increased in the last six months, compared with 19% of mortgagors who reported their mortgage payments had increased over this period. The difference in the responses of renters and mortgagors likely reflects some mortgagors being on fixed rate mortgages, whereas renters may be more exposed to increases in rent.

Borrowing and use of credit
In March 2022 (16 to 27 March 2022), 17% of adults reported borrowing more money or using more credit than they did a year ago. Despite reported increases in the cost of living, this measure has remained relatively stable since November 2021 (3 to 14 November 2021).

A potential explanation of this is the use of savings to cover usual bills. Data collected for the most recent period (16 to 27 March 2022) show around 1 in 4 (26%) adults, who reported that their household finances were being affected by the coronavirus (COVID-19) pandemic, reported using savings to cover living costs. During the pandemic (financial year ending (FYE) 2021), household spending fell by more relative to income across all income groups. This provided households with a greater opportunity to save or ease financial pressures.

A further explanation for less pressure on individual and household finances is changes in consumption behaviours. Since December 2021 (15 December 2021 to 3 January 2022) the most common reported action following an increase in the cost of living was spending less on non-essentials. In the most recent period (16 to 27 March 2022) more than half (54%) reported spending less on non-essential goods and services. Around 1 in 3 of those who reported an increase in their cost of living also reported spending less on food shopping, or shopping around more. Affordability concerns may explain some of the falls in food store sales volumes in recent months.

There are significant differences in the use of credit and borrowing across personal characteristics, with adults living in the most deprived areas of England (23%) twice as likely to report that they had borrowed more money or used more credit than usual compared with adults living in the least deprived areas of England (11%).

Read much more and see graphs at
https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/articles/therisingcostoflivinganditsimpactonindividualsingreatbritain/november2021tomarch2022