Around 10.1 million people in the UK are falling behind on bills or finding their payments a heavy burden, according to Stop the Squeeze. That is a 31.2% increase since 2017.
Davies added: “This crisis isn’t about abstract statistics, it’s about people struggling to put food on the table, pay their rent, and heat their homes – it won’t be over until the millions of people who can’t do these things have greater economic security.”
“Instead of complacent declarations of victory over inflation, we need a real cost of living plan for Britain, focused on addressing the root causes of the crisis and getting people’s incomes up and their bills down.”
Typical annual household energy bills in 2024 are 67% higher in real terms than July 2021, according to the Resolution Foundation.
Meanwhile, food and non-alcoholic drink prices are 32% higher. High prices mean that people are struggling to afford to feed themselves and heat their homes, and it has a disproportionate impact on the poorest families who spend a greater proportion of their income on the essentials.
James Smith, research director at the Resolution Foundation, said the latest drop in inflation is a “hugely welcome step” but added: “Consumers are still living with far higher prices and how you take today’s inflation data will depend on whether your glass is half full or half empty – while it’s clearly good news headline inflation is back to normal levels, it is disappointing that price pressures haven’t fallen further and that measures of services inflation are proving more stubborn that expected.”
The Trussell Trust’s latest annual statistics showed that more than 655,000 people needed to use a food bank in its network for the first time last year.
Helen Barnard, director of policy at the Trussell Trust, said: “It’s good news that inflation is returning to a more normal level, but worryingly the cost of essentials like food and energy is stabilising at a far higher level than was the case a couple of years ago.
“For people on the lowest incomes, social security hasn’t kept pace with these rising costs, leaving millions of people simply unable to afford the essentials.”
Universal credit falls short by around £30 each week of the money needed to survive even after benefits were increased in April, according to research by the Trussell Trust and Joseph Rowntree Foundation.
Backed by organisations including the Big Issue, the charities are calling for an essentials guarantee – to ensure that universal credit gives people at least the money they need to survive.
Barnard added: “Destitution has more than doubled in the last five years. The number of emergency food parcels distributed has nearly doubled in the last five years. This demonstrates clearly that an apparent return to more normal economic times does not solve the appallingly high levels of severe hardship we see across the UK.
“We must not allow destitution to become ‘baked in’ to our economy. Every political party must set out their plan to turn back the tide of hardship we see in food banks each and every day.”
House prices are also still rising. Average UK house prices increased by 1.8% in the 12 months to March, according to official figures. The ONS said average house prices are now at £283,000. Meanwhile, UK private rents increased by 8.9% in the year to April.
The number of people in mortgage arrears rose 25% over 2023. Higher mortgage rates could soon hit thousands of households, with almost 900,000 UK mortgages up for renewal in the first three quarters of 2024.
There are fears that the Bank of England may remain cautious and keep interest rates high, as a result of the lower-than-expected drop in inflation.
Carsten Jung, senior economist at IPPR said: “Inflation temporarily falling close to the Bank of England’s target is good news, but wages are still catching up with post-pandemic price increases. This is why it’s important that the bank does not hamper the UK’s nascent recovery by leaving interest rates too high for too long.
“The bank has tightened the screws too much and this will hold back the economy and wage growth going forward. They recently admitted that inflation is falling faster than it originally thought, suggesting an earlier reversal in policy.
“Looking back, it is clear that the government could have done more to shield people from inflation. Other countries like France and Japan were more proactive in easing price increases and did more to stop firms from amplifying inflation via shielding their profits. There are still actions it can take.”
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