Inflation falls but squeeze on family finances stays tight

Despite today's announcement that inflation has fallen, uSwitch.com warns that the pressure on families is tighter than ever.

Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "Today's figure of 3.1% may represent a drop, but will provide no relief to the millions of households struggling to stay afloat. For those that spend a high proportion of their income on food, life is getting very tough. Luxuries have been the first to go, but the current climate is forcing 24% of people to also cut back on food. This could get worse before it gets better.

"This is a difficult time for consumers, compounded by the fact that 16 million are experiencing a pay freeze this year. For many, the only way to keep afloat is by building up debt. Nearly one in five of us are already funding living costs with debt and five million consumers are spending more than they earn.

"While short-term debt solutions may seem an easy way to fund the cost of living they can lead to severe debt issues if not managed properly. Rather than continuing to plug the hole by borrowing, I would urge people to strip down their living costs and household bills to the bare minimum."

1 in 5 (18%) are using debt to fund their living costs

49% of workers have seen a pay freeze and for those who do expect one, it will be just 1.9% on average
 
5.4 million consumers (11%) are living beyond their means with 48% using overdrafts to fund their lifestyles - 13 million (26%) just break even at the end of every month.