Cost of food is most likely reason families struggle to payday

By August 23, 2018R3

Three in ten adults in the North West (29%) struggle to reach payday – with the cost of food most likely to be the cause of this , according to research by the insolvency trade body R3.

Its latest survey shows that almost half (48%) of adults living in the region who struggle to make it to payday say it is because of food prices, far more than those who cite spending on going out or non-essentials (34%), energy costs (30%), fuel or transport costs (28%), making credit card repayments (26%), rent (24%), childcare (11%) or mortgage repayments (10%).

It follows a period of rising food prices sparked by the decline in the value of the pound. According to the Office for National Statistics, food inflation stood at 2% in June, year on year, after reaching a high of 4.1% in November last year.

Paul Barber, North West chair of R3 and a partner at Begbies Traynor, said that while the percentage of North West adults struggling to payday had fallen from 41% in August last year, the cost of food continues to be a real problem.

“Our research indicates that half of adultsin the North West say they struggle to reach pay day due to the cost of food – whether they struggle to afford it or that food prices make it difficult for them to pay other bills. Despite record levels of people in work, there has been very little real growth in wages and both food and energy prices have been on the rise.

“As insolvency professionals, one of the biggest trends we have seen in recent years is the growth in the number of families who are ‘just about managing’. At one time when people came to us with debt problems, it was often due to overspending. Now it’s more likely to be because they are struggling to afford the basics.”

Recent research by the Resolution Foundation reveals that millions of ‘just about managing’ families are no better off today than they were 15 years ago. Households in the lower half of incomes typically earn £14,800 now – £100 less in real terms than in 2003.

Meanwhile figures from the Office of National Statistics released in July show that in 2017 household expenditure surpassed income for the first time in nearly 30 years, with households spending on average £900 more than they received in income across the year, funded by savings or borrowing. It said disposable income has risen only modestly while rising prices have put pressure on budgets.

The R3 research, part of a long-running survey of Britain’s personal finances, found that 34% of those who struggle to payday said it was because of spending on luxuries such as going out.

Paul Barber, North West chair of R3 and a partner at Begbies Traynor, adds: “Financial problems can affect anyone at any time, and anyone struggling with their financial situation should seek advice from a qualified source of help and support as the first step on a journey to gaining financial stability.”