With the Office for National Statistics confirming that annual consumer price inflation reached 9.1% in May, up from 9% in April, with its analysis showing that people are using a variety of responses to cope such as cutting back on food/essential spending (41%), using savings (21%), and turning more to credit (15%), StepChange Debt Charity says that the Government’s package of support measures is still only partially filling the gap between people’s incomes and their increasing cost of living. For people in debt and on low incomes, without financial resilience to absorb higher costs into their budgets, further targeted help is going to be needed.
Richard Lane, Director of External Affairs at StepChange, said: “The Government’s package of cost of living support measures will undoubtedly help many households to cope, albeit with difficulty. Yet for many people on low incomes and in debt, who have already pared back to the bare essentials, there’s still a shortfall between income and essential spending. Every hike in inflation widens the gap, and leaves people having to make ever more difficult choices in an impossible financial situation.
“Among new clients turning to us for help, through the course of this year we’ve seen that on average they already have higher levels of arrears at the time they seek advice than they did last year. Helping lower income households to stabilise their budgets and prevent a worsening debt spiral needs to be an ongoing urgent priority for Government as well as for firms.”