Low-income households, young people and Black people’s financial wellbeing most impacted by cost-of-living crisis
Today, new findings are published as part of the National Centre for Social Research (NatCen)’s annual Society Watch, which in 2023 looks at how the cost-of-living crisis has affected people’s behaviours, consumption patterns and wellbeing
In 2023, the people of Britain are facing the second nationwide crisis in three years. As the country recovers from COVID-19, price rises rapidly outstripping rises in average wages and benefits, an acute challenge is presented for people on lower incomes, and those with more limited financial resilience.
This report, The Price We Pay – the social impact of the cost-of-living crisis, launched at an event supported by the Nuffield Foundation, examines NatCen Panel research which found low-income households, younger people and Black people were most likely to be impacted by rising prices:
- Nearly 40% of Black people and 50% of people ‘finding it very difficult’ to make ends meet were in arrears with household bills
- Nearly two thirds of participants had cut back on saving habits, with young middle-aged people (30- to 49-year olds) particularly likely to be doing so
- 47% of participants, and higher proportions of younger adults and people ‘finding it very difficult’ to make ends meet, were buying less healthy food
- 40% of participants were very worried about money, with men typically more worried than women, and rates of worry about mental health and work-life balance remained significantly higher than before the pandemic.
Demographic divides and responses to the crisis
People were most likely to report cutting back expenditure by eating less fresh food, cutting back on social visits, making fewer journeys, spending less on gifts, and reducing the number or cost of holidays. Men were more likely than women to say they had reduced their spending. Cost-cutting measures were also more common in younger participants, those from minority ethnic backgrounds and those who reported finding their current financial situation very difficult.
Groups who were more likely to be in arrears in 2019 – Black people and people struggling with their current income – were in a much worse position in 2023. The proportion with household bills arrears increased from 19% to 39% for Black people and from 43% to 48% for those ‘finding it very difficult’ financially.
Changes in worries and life satisfaction
The proportion of people worrying about money or debt has grown since the pandemic, but a sharper rise is visible in worries about mental health and work-life balance. The proportion of those feeling very dissatisfied with their life also increased, most notably from 3% to 7% for people aged 40-49, and 30% of people ‘finding it very difficult’ very dissatisfied.
Richard Brown, Director of Society Views and co-author of the Society Watch 2023 report said: “The cost-of-living crisis is not affecting everyone equally, people who have experienced long-term disadvantage and ran down their financial resilience during the COVID-19 pandemic are now most exposed to rising prices. So far, most people’s cost-cutting measures have focused on non-essentials, but people are saving less and borrowing more, and the crisis is leading to a substantial minority of people going hungry or without heating. Government support has cushioned the blow to date, but continuing action may be needed to minimise damage to people’s lives and society’s long-term prosperity.”