How are households coping as the cost of living crisis enters its second year?

How are households coping as the cost of living crisis enters its second year? Our new report, Hoping and coping, draws on a cost of living survey of over 10,000 individuals to examine what action people have taken in the face of rising prices. In it, we show how the crisis has affected living standards and health, looking specifically at the impact across different income and age groups.

We find that the cost of living crisis has had a broad impact – with three-quarters of all adults cutting back on spending since December. Energy use and food shopping were the two most popular areas of spending to cut back with more than half of adults doing so.

Richer and older people have been more insulated from the crisis than others - they are the most likely to say that they have not had to cut back at all in the past three months.

While savings were used by young-and-old and rich-and-poor alike, younger people were far less likely to have significant savings to rely upon at all. In fact, compared to our previous survey the number of young people with ￡1,000 or more in savings dropped over the winter.

And for those with little or no savings, debt was a far more popular choice, with half of adults with low savings relying on credit cards, overdrafts or other formal lending to get by. Concerningly, 1-in-5 young people have missed a priority bill payment over the winter. Falling into bill arrears can lead to significant negative consequences – with penalties, court summons and negative impact on credit scores.

Our survey also found that a quarter of respondents had asked for help from family and friends to help get by.

When it comes to this informal support, the ‘bank of mum and dad’ once again is the biggest driver of financial help. However, this option for support depends on family finances, with poorer adults half as likely to be able to help others.

Concerningly, our survey also found that 1-in-6 poorer adults had to regularly skip meals or eat less due to financial pressures in the past month, with significantly higher levels of food insecurity reported compared to before the crisis.

The impact of the crisis extended to people’s health too, with adults who were relying on more worrying means of getting by – as well as those in food insecurity – being as much as five-times more likely to be experiencing worse mental health than everyone else.

In many ways these findings reflect the inequalities that we entered the crisis with.

However, they tell us too about what we can expect in the future too as high energy bills stay with us, while Government support starts to unwind.

Read the full report, by Molly Broome , Karl Handscomb and Lalitha Try on our website below: