Struggling households at full stretch
Households are now at full stretch financially, as nearly half of families would struggle if they had to find another £99 a month, according to Halifax.
It said middle-aged people are being hit hardest, with those in their 40s and 50s most likely to face rising household bills.
With inflation higher than wage increases, 46% of households would struggle to find an extra £99 in their monthly household spending, Halifax says.
One in four households (26%) would be stretched by an increase of £49, while 13% said finding just £24 a month more in their budget would leave them stretched, the bank claims.
The latest government statistics indicate that annual wage growth stood at 0.8% in the first quarter of 2013 compared to the same period of 2012, while inflation is currently 2.8%. This means people’s real take-home pay is being seriously eroded by the cost of living.
No room for manoeuvre
Anthony Warrington, director of personal current accounts at Halifax, said inflation is putting families under increasing pressure, with rising mortgages or rent, food and energy bills giving families little room for manoeuvre.
He added: "There is no quick way to ease the squeeze on households and many are already cutting back where they can. With so many households at full stretch it's even more important to make strict budgets and keep on top of finances and outgoings."
Middle-aged people are the worst hit by rising bills, with 29% of those in their 40s and 50s paying higher fuel and energy bills in the last year, compared to the UK average of 26%. Those in the 40s also saw higher mortgages and rental payments, as well as higher food costs.
Warrington said: "Those in their 40s and 50s are most likely to have family living at home, which means their food and energy bills are likely to be higher."
The report also showed 40% of UK households feel their financial situation will get worse in the next twelve months. This was higher among those in their 50s, with 56% saying they feel their financial situation will get worse over the next year.
But 62% of households also said they are either very or fairly concerned about their ability to save for the future; while 53% said they worry about not having enough to cover future bills, and 32% worried about paying their rent or mortgage.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).