Nine in 10 people reported an increase in their living costs in March, a 25% increase on the number recorded in November 2021.

As such, 23% said it was difficult or very difficult to pay their usual household bills, according to the Office for National Statistics (ONS) data.

This is up from the 17% recorded between 3 and 14 November 2021.

The snapshot data (16 to 27 March) revealed costs have spiralled across food, energy and housing, but rising bills will be felt hardest by those living in the most deprived areas of England.

This is because housing, fuel and power are the least income-elastic category of spending.

Here, the proportion of people finding it difficult or very difficult to pay their usual household bills has increased from 25% to 34%, half the number of those in the least deprived areas of England (17%).

The ONS’ ‘Rising cost of living and its impact on individuals in Great Britain’ report highlighted that a greater percentage of renters (37%) than mortgagors (23%) struggled to pay household bills compared with a year ago.

It said property renters are more concentrated in the lower income quintiles than mortgagors and therefore “have the potential to be affected more by changes in their cost of living”.

Tenants “may be more exposed to increases in rent”, with 34% stating their rent had increased in the last six months. The ONS also revealed that March 2022 saw the largest annual increase in private rental prices paid by tenants in the UK since July 2016 at 2.4%.

For those paying off a mortgage on a standard variable rate (SVR), housing payments are likely to have increased as the average floating mortgage interest rate has increased 0.2 percentage points.

The ONS found that among those paying off a mortgage or rent, 30% said it was very or somewhat difficult to afford payments.

However, despite this figure, only 3% claimed to be behind rent or mortgage payments, with less than 1% of mortgagors reporting mortgage arrears.

Aside from housing, gas and electricity bills were the second most common reason reported by adults for the increased cost of living. This was at its highest level with 83% saying they’ve been hit with higher costs.

Worryingly, this data was collected before the 1 April energy price cap hike (average 54% increase), with four in 10 people stating they were struggling with their bills in March. This figure rose to 57% for those living in the most deprived areas.

For 6%, they’re already behind on their energy bills, rising to 13% in the most deprived areas. Further, 13% of renters also said they were behind on energy bills, compared to just 3% of those with a mortgage, and 2% who owned their home outright.

Borrowing, credit and savings

Meanwhile, 17% of adults reported borrowing more money or using more credit than a year ago, but the ONS said this figure is ‘stable’ considering the cost of living increases.

One potential explanation is the use of savings squirreled away during the pandemic. A quarter of households said they were using savings which had built up during the Covid lockdowns which meant all but essential retailers were closed to stop the spread of the virus.

A third of people said they cut back on food shopping, or were shopping around more.

But for those in the most deprived areas, 23% said they were twice as likely to borrow money or use credit than usual compared to those in the least deprived areas of England (11%).

Adults living in the most deprived areas of England were more likely to report not being able to save in the next 12 months than adults living in the least deprived areas of England. In March 2022, more than half (55%) of those living in most deprived areas reported not having the ability to save in the next 12 months; an increase from 39% in November 2021.

In contrast, 34% of adults living in the least deprived areas of England reported that in view of the general economic situation, they would not be able to save any money in the next 12 months.

‘Cost-of-living crisis isn’t going away any time soon’

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “Pretty much everyone is feeling the pinch but those on lower incomes are particularly badly affected with prices rising fastest on life’s essentials such as food and heating bills. People report trying to use less fuel as a means of keeping costs down and there are also signs people are cutting back on their food shops. However, people can only cut back so far on these things so there is precious little room for manoeuvre.”

Laura Suter, head of personal finance at AJ Bell, added: “Anyone struggling to meet the cost of their basic bills or housing costs needs to take action now, as the cost-of-living crisis isn’t going away any time soon. We’re facing another increase in energy bills later this year and expected further rises to the Base Rate means that housing and borrowing costs are also likely to jump.

“Budgeting is essential for anyone who finds themselves in a financial squeeze. It’s important to know what’s coming in vs what’s going out so you can work out whether you’re spending more than you earn and where you can make cutbacks.

“Anyone who is falling behind on their bills should also check what help may be available to them, from grants from local councils to additional benefits they might not be claiming or a temporary reprieve from energy bills. Contacting your local council or an organisation like Citizens Advice can be a good place to start.”