Around nine in 10 UK adults reported an increase in their cost of living, with around a quarter of people finding it difficult to pay their household bills last month, according to the Office for National Statistics (ONS).
Some 23% of people surveyed in March by the ONS said it was difficult or very difficult to pay their usual bills, up from 17% in November.
Among all adults, 43% reported they would not be able to save money in the next 12 months — the highest percentage since this question was first asked in March 2020.
The figures cover the months between November last year and March this year, meaning this was while 22 million households in Britain still had their energy bills capped at £1,277 per year for the average household. The cap rose to £1,971 on 1 April and has been applied to most default tariffs.
Hugh Stickland, from the ONS, said the analysis shows how the rising cost of living is "impacting on people’s financial resilience”.
In the most deprived parts of England 57% of people reported difficulty in paying energy bills, but even in the least deprived areas of the country 35% struggled.
The figures also showed that close to one in five (17%) adults reported borrowing more money or using more credit than they did a year ago.
Of adults currently paying off a mortgage 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.
Jack Leslie, senior economist at the Resolution Foundation, said: “Today’s ONS release shows that the cost of living crisis is already hitting UK families hard, with over four out of five adults already reporting an increase in their living costs between February and March 2022, and over two in five reporting that they were struggling with rising energy costs in March — before the lifting of the price cap in April.
“The combination of shrinking pay packets and rising costs means that the pressure on households is building, with lower-income families set to feel the squeeze the most, and over a third of the most deprived fifth of households in England already saying it has been difficult or very difficult to pay their usual bills.
"This is set to get worse, with the estimated number of households experiencing fuel stress hitting five million this month.
“Going forwards, the government must do it all it can to protect those who will be hardest hit — with support for low-income households a priority.”
Among all adults, 43% reported that they would not be able to save money in the next 12 months — this is the highest this percentage has been since this question was first asked in March 2020.
Inflation rose by 7% in the 12 months to March, according to the latest Consumer Prices Index data from the ONS.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, added: "Pretty much everyone is feeling the pinch but those on lower incomes are particularly badly affected with prices rising fastest on life’s essentials such as food and heating bills.
"People report trying to use less fuel as a means of keeping costs down and there are also signs people are cutting back on their food shops. However, people can only cut back so far on these things so there is precious little room for manoeuvre.
"So far, the current situation hasn’t translated into people falling behind with rents or mortgages — only around 3% of people have reported this, a figure that has remained largely stable. However, this could be because people are burning through their lockdown savings in a bid to meet their day to day living costs while others opt to borrow more to meet their needs. Mortgage payers have had the option to fix their costs in recent months, but those who rent will feel very exposed to further increases in the coming months.”
Rosie Hooper, chartered financial planner at Quilter, said: "A scary 30% of people are finding it hard to service their mortgage and/or loan, or rent, or shared ownership payments. If finances are stretched even further and this difficulty becomes an impossibility, we could have a significant problem on our hands with thousands of people defaulting on their payments and potentially losing their homes.
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"Generation rent who have already had to suffer ever increasing house prices are now going to struggle even more to save for that elusive deposit to get on the housing ladder. The ONS analysis found that 43% of respondents reported that they would not be able to save money in the next 12 months, which will mean any house purchasing plans will need to be put on hold until once again deposit pots can start to be funded again. This may further take the wind out of the sails of the housing market as fewer potential buyers reduces demand and house prices with it.
"We are in for a tough few months or even years but it is always best to seek help if you are struggling with your finances to avoid spiralling into debt."
The ONS also revealed data that shows the UK’s disability pay gap was 13.8% last year, with workers with a disability earning almost £2 per hour less. The gap has widened since 2014 when it stood at 11.7%.
Disabled employees earned a median of £12.10 per hour and non-disabled employees a median of £14.03 per hour in 2021.