About 700,000 households missed mortgage or rent payments last month as the cost of living crisis continued to take its toll, according to a survey.
Which?, the consumer group, said its online polling found that 5 per cent of renters missed a payment, continuing a high level over the past year and “showing many are struggling to keep a roof over their head”.
In addition, more than 3 per cent of mortgage-holders missed payments, amid soaring interest rates.
The Bank of England’s base rate has risen from 0.1 per cent in December 2021 to 4.25 per cent now. Economists believe it could be increased again to 4.5 per cent on Thursday, feeding through to higher mortgage rates for many homeowners sooner or later.
Rising energy and raw materials costs since Russia’s invasion of Ukraine have contributed to increased prices for consumers across the economy.
Energy bills have almost doubled since winter 2021-22, averaging a record £2,500 a year since October last year, while grocery inflation reached a new record 15.7 per cent in April.
Overall the Which? survey found that 7.3 per cent of respondents missed or defaulted on at least one payment for housing, loans, credit cards or bills in April, translating to an estimate of two million households nationally.
The figure is actually the lowest seen so far this year in the monthly polling and down from 8.8 per cent in March, but Which? said the drop was “not statistically significant”. The missed payment rate was the same as seen in April 2022 and up from 6.5 per cent in April 2021 and 5.2 per cent in April 2020.
Separate figures from the British Retail Consortium, the trade association, today show that consumers are spending more on everything from food to jewellery, but rampant price inflation means that they are getting far less for their money.
Total retail sales across the UK rose 5.1 per cent in April compared with the same month in 2022, according to the data from the BRC and KPMG, the financial services group. The BRC said that the rise in sales “masked a much larger drop in volumes” once price rises had been factored in.
Data from Barclaycard supported the suggestion that Britons are spending more on less. Consumer card spending rose 4.3 per cent year-on-year in April, less than half the latest official inflation rate of 8.9 per cent.
Food sales rose by an annual rate of 9.8 per cent last month, according to the BRC. Barclaycard suggested that spending on groceries was tracking below inflation because shoppers were switching to supermarket-branded products and buying more discounted “yellow sticker” items.
Spending on non-food items, such as clothes and electronics, increased by 1.2 per cent versus April 2022, but volumes fell. Helen Dickinson, the chief executive of the BRC, said that sales of clothes underperformed because of the poor weather. However, Barclaycard said that clothes sales were weak because people were cutting back on their discretionary spending in order to divert more of their money towards household bills. This trend was also reflected in the third straight monthly drop in spending in restaurants.
Fast food spending rose by 9 per cent while spending on digital subscriptions was up by 8.6 per cent, the biggest year-on-year increase recorded since September 2021.