In the four months since the last Tracker survey in June 2022, the UK has had three Prime Ministers, four Chancellors and seen the official proclamation of a new Monarch. In this period of political and economic turbulence, “the Government has swung from announcing the biggest tax cuts in 50 years to implementing the biggest fiscal tightening since 2010 in just a few weeks.” 

This edition of the Tracker also marks a year since the cost-of-living crisis started to take hold on UK households, in Autumn 2021. Fears about rising inflation have been realised, with the annual rate of inflation reaching a 41-year high of 11.1% in October 2022, driven by big year-on-year increases in domestic gas prices (up 129% since October 2021) and domestic energy prices (up 66% over the same period). Low-income households spend a larger proportion of their income on energy and food, so are more affected by price increases. As a result, the highest 12-month inflation rate was recorded among the bottom three income deciles in October 2022. Interest rates have been increased to stem inflation, benefitting savers but adding to borrowing costs for households, notably on mortgage interest rates but also consumer credit, at a time when our survey shows more households relying on multiple credit cards and around two in ten (16%) paying the minimum or less on at least one card.  

In its Autumn Statement on 17 November 2022, the government announced additional help for households including targeted cost of living payments; benefits uprating; increased National Living Wage; and a social housing rent cap. Even so, the OBR forecast that “In 2022-23 and 2023-24, living standards are set for the largest fall on record” with a decrease of 7.1 per cent in average real household disposable incomes, equivalent to £1,700 per household.

Key findings

Following a marked fall in household financial wellbeing between October 2021 and June 2022, this seventh wave of the Tracker shows a continued deterioration for households across the income range.

The cost of living crisis continues to take a heavy toll, with nearly four-out-of-five households reporting an increase in overall spending since the start of 2022, mainly due to hikes in energy bills but also the cost of food, housing, and clothing.

9.9 million households are concerned about their finances over the Christmas period – an increase of over 4.2 million compared with last year.

While the recently announced support measures will help struggling households, millions are facing a further decline in living standards and the daily reality of budgets that won’t stretch far enough. 

About the research

Fieldwork for the 7th Financial Fairness Tracker survey took place between 25th October and 1st November 2022, with the findings in this report based on responses from 6,108 people. The first part of this report examines the financial wellbeing of UK households in October 2022. Following a marked fall in household financial wellbeing between October 2021 and June 2022, this Tracker shows a continued deterioration for households across the income range. 

About the Tracker

abrdn Financial Fairness Trust has commissioned a periodic cross-sectional survey to track the financial situation of UK households since the start of the coronavirus pandemic in early 2020. The latest wave of this survey – conducted in late October 2022 – gives insight into the nation’s finances during a cost of living crisis. The findings are based on responses from 6,108 households about their income, payment of bills, borrowing, debt, savings and ability to pay for other essentials such as food. A team from the Personal Finance Research Centre at the University of Bristol analysed the respondent data collected from YouGov’s panel and produced these findings.