One in four households reach financial edge due to inflation

Tuesday, 14 June 2011 02:01

Almost a quarter (22 per cent) of people are reaching their financial tipping point caused by inflation that stayed at 4.5 per cent for May.

Moneysupermarket.com found in recent research that over one in five British households are already at the edge of affordability.

However, since conducting its survey, the Bank of England has confirmed the rate of inflation as 4.5 per cent for a further month.

That is not only above the target of two per cent, but well beyond the upper acceptable range limit of three per cent.

With the continued above-target rate of inflation bearing down on UK households, moneysupermarket.com head of banking Kevin Mountford says families are becoming accustomed to the cost of living increasing across the board.

"Energy hikes, the soaring price of petrol and the rising cost of everyday basics such as food have hit households hard," he points out.

"Many workers also have to deal with pay freezes, meaning their incomes are actually dropping in real terms."

Almost as many Brits as were at their financial tipping point said bills were their greatest financial pressure.

This group, 19 per cent of the total survey court, are warned to expect price rises in the months to come as utility suppliers follow Scottish Power's lead.

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