he Money Stats – November 2021 – Prices and Labour Supply Bring Heavy Pressure on UK Household Budgets

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UK household budgets continue to be heavily pressured from all sides, with both international and national factors adding unexpected challenges into the mix, according to the November 2021 Money Statistics, produced by The Money Charity.

Significant challenging effects are being seen across the board on UK household budgets, driven by factors both expected and unexpected. In the year to October 2021, the inflation rate increased to 4.2%, alongside petrol prices rising sharply by 6.2 pence per litre in the month of October alone, to an average total of 141.4 pence per litre.

Within the headline overall inflation rate, transport prices went up by 9.9%, household services including energy by 6.8%, with restaurants and hotels rising by 6.3%.

These higher prices are partly driven by international pressures, but within the UK, the Government’s pandemic spending, combined with ongoing low Bank of England interest rates, has led to demand increasing faster than supply. This has caused unemployment to fall and prices to rise. In September 2021, the unemployment rate fell to 4.3%, while job vacancies rose to a record 1.172 million.

Alongside the effects of Covid-19 and Brexit, the UK also finds itself bumping up against the issue of available labour supply. Additional analysis in this month’s Money Statistics report shows that for the first time in many years, the numbers of economically active people in the UK have fallen significantly, from 34.4 million in February 2020 to 34.0 million in September 2021. During this period, the total working-age population has also fallen, meaning there is no large, ready supply of labour to more easily enable the economy to grow. This trend has played a leading role in the labour shortages being seen in so many industries.

Michelle Highman, Chief Executive of The Money Charity says: “The pressure of inflation is becoming severe, meaning that many UK households will see real incomes falling over this winter and beyond, heavily impacting on their Financial Wellbeing. Policy-makers urgently need to think hard about how to turn this situation around, particularly if they aim to bring about the future ‘high-wage economy’ that has been widely promised.

“For most people, these major financial forces feel overwhelming and far beyond our own control. However, as we help people to think through in our Financial Wellbeing Workshops and Webinars, the key principles of Financial Capability still apply, helping to control the things that are within their own hands. Namely, implementing and using a robust, considered budget, planning your income and expenditure in circumstances good and bad, as well as engaging with saving wherever possible.”

Other Striking Numbers from the November Money Statistics: 

  • 313 people a day were declared insolvent or bankrupt in England and Wales in August to October 2021. This was equivalent to one person every 4 minutes and 37 seconds. (P8.)
  • The average first-time buyer house price increased by 3% in the year to September 2021. (P10.)
  • The average credit card debt per UK household in September 2021 was £2,058. (P5.)