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Cost of living squeeze hits 900,000 more households

·Finance Reporter, Yahoo Finance UK
·2-min read
cost of living A food bank outside the stadium before the Premier League match at the King Power Stadium, Leicester.
NEF estimates 23.5 million people will be unable to afford the cost of living this year. Photo: PA

Around 900,000 more households will struggle to put food on the table or replace old clothes this year as the cost of living crisis squeezes families.

According to analysis by the New Economics Foundation (NEF), families newly pushed into crisis are on middle incomes, with average earnings from work of £33,000 before tax. This means an additional 2.2 million people will struggle to pay the bills.

Overall, 23.5 million people will be unable to afford the cost of living this year.

Read more: UK facing worst cost of living crisis in 60 years

The rise in costs for the poorest half of people is nine times larger than for the richest 5% as a proportion of income, and for families in the middle of the income distribution the rise in costs is six times larger.

White households are seeing an average increase in costs of essentials of £2,200 (5% of their income) while the increase for black, Asian and minority ethnic (BAME) households is £2,900 (8% of their income). This means on average BAME households are 1.6 times more affected by the cost of living than their white counterparts.

Single adult female households will see costs increasing by £1,400 (6% of income) on average compared to £1,110 (4% of income) for single adult male households. This means women are 1.5 times more affected than their male counterparts on average.

Sam Tims, economist at the New Economics Foundation, said: “The cost-of-living crisis will deepen inequality in Britain and yet no political party is talking seriously about addressing the enormity of this challenge by fixing our broken social safety net.

Read more: Rising food and fuel costs sting low-income households

"The worsening crisis makes clear that we urgently need a bold new way of doing income support to ensure households do not fall into deeper levels of destitution. Poverty limits people’s freedom, restricts education and health outcomes and reinforces the imbalance in our economy.”

NEF is calling for the creation of a new social security system, or ‘Living Income’, to set an ‘income floor’ based on the Minimum Income Standard (MIS), below which no one can fall whether they are in or out of work.

Watch: Why are gas prices rising

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