“I can no longer afford to socialise”: an estimated 2.3 million households missed payments in January

New research from consumer watchdog Which? reveals that over two million UK households missed payments in January as the lived inflation gap between income groups hit record levels.

The latest findings from Which?’s Consumer Insight Tracker showed that an estimated 2.3 million households missed or defaulted on at least one mortgage, rent, loan, credit card, or bill in January 2023, marking an increase from December 2022 when 1.9 million households were estimated to have defaulted or missed a payment.

59% of households made financial adjustments to cover essential spending, such as cutting back on essentials, selling items, or dipping into savings.

This equates to an estimated 16.5 million households, a significant increase from 49% seen last year but lower than the peak of 65% seen in September 2022. The number of households cutting back on essentials has increased from 27% last January to 38% this January.

A 46-year-old man told Which? the cost of living crisis has affected his quality of life. “I find it hard to sleep. I am eating less due to money and worry.”

“My mortgage has risen significantly. I am finding it hard to find money for energy bills. As I live in a rural area, I can no longer afford to socialise with friends and family due to the cost of fuel. I am feeling more isolated than ever,” he said.

Which? also found that different household types and income groups experienced different levels of inflation in 2022.

Households with the lowest incomes experienced much steeper inflation increases, peaking at an estimated 11.5% in October 2022, nearly 3% higher than the highest income group (8.6%).

Single parent and retired households experienced particularly high lived inflation rates because they spend a large portion of their budget on food, energy, and fuel, which have all seen significant price hikes.

This continued pressure on household finances is causing stress and worry for many people, with one 31-year-old woman from the South West saying “I constantly stress and worry about not having enough money to provide for my family. This is having a significant impact on my mental health.”

With the UK heading into recession, rising mortgages and rent costs, and the energy price guarantee becoming less generous from April, consumers will face further financial pressures in 2023.

In response, Which? has launched a campaign calling on essential businesses, such as energy firms, broadband providers, and supermarkets, to do more to help consumers struggling to make ends meet.

Rocio Concha, Which? Director of Policy and Advocacy, said:

“With 2.3 million UK households missing payments in January and those on the lowest incomes being hit hardest, consumers will need more support than ever in 2023.

“As the cost of living crisis continues to bite into household finances, we are calling on businesses in essential sectors – like food, energy and broadband providers – to do more to help customers get a good deal and avoid unnecessary or unfair costs and charges.”

More information on the Which? campaign is available here.