The cost of living crisis is reaching new heights as new data from the Centre for Business and Economic Research suggests that a fifth of UK households now have to contend with negative disposable income.
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Families need to figure out how to bridge a gap of £60 between what they’re earning and the money needed to cover essentials including rent, transport, food, and energy bills. The UK public has to keep up with their current standard of living with the lowest amount of spare cash in almost five years.
Living costs soared up to 11% year on year as of June, leading to a record drop of 18% in average household disposable income, down to just £175.80 a month. Last month the average household had £200 a week for spending after taking care of their essential living expenses, a number which has fallen eight months in a row and one so low it has not been seen since December 2017.
Unfortunately, those with the lowest incomes were hit the hardest as inflation caused the prices of essentials to skyrocket, creating even more pressure on public spending power. Where you live also affected how much you were impacted as those in the northeast of England and Northern Ireland didn’t fare so well, while Londoners are only just recently seeing a decline in spare cash.
It should come as no surprise that since people are struggling to afford essentials, they’re cutting back on non-essentials such as subscription services, gambling, hobbies, travel, and entertainment. The only category people are actually spending more on is fuel and electric vehicle charging, which shouldn’t be shocking with the way energy prices are at the moment.
It’s worth noting that compared to last year when we were still in the thick of COVID, spending on holidays, leisure activities, dining out, digital goods, and clothing actually increased year on year as people didn’t have strict lockdown protocols to adhere to.
If you’re struggling with income and expenditure and need help figuring out how to achieve a balance and find stability, get in touch with the experts at Dental & Medical Financial Services now.