Five million families ‘relying on loans and savings to cover their food bills’

May 6, 2013 2:14 pm 0 comments Views: 726

Five million British households are relying on loans and savings to meet grocery costs, research suggested today, as they approach financial ‘breaking point’. 

One in five families said that their monthly incomes would not stretch to cover their total food bill in April, consumer group Which? found.

That meant they had to use a credit card, overdraft or loan, or plunder their savings instead. This would equate to five million families if the findings were projected across the UK, Which? said.

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Many households are turning to credit cards for their weekly food shop.

The findings indicate that households are still severely squeezed, despite official figures last week showing that personal insolvencies have fallen to their lowest level in five years.

Insolvency Service statistics showed there were 25,006 individual insolvencies across England and Wales in the first three months of 2013, a drop of 27 per cent on last year and the lowest figure recorded since the first quarter of 2008.

The worst-affected group was households earning less than £21,000 a year and squeezed 30 to 49-year-olds, many of whom had children.

Some 82 per cent of these people said that they were worried about food prices and 57 per cent were finding it ‘difficult to cope’ on their current income.

People in this group were also more likely to be worried about their level of debt and 74 per cent of them described economy as ‘poor’.

Which? executive director Richard Lloyd said: ‘Our tracker shows that many households are stretched to their financial breaking point, with rising food prices one of the top worries for squeezed consumers.

‘It’s simply shocking that so many people need to use savings or credit to pay for essentials like food.’

The study also found that only one quarter of people said that they were living comfortably on their incomes and more than one third (36 per cent) felt squeezed.

Two-thirds are worried about the effects of low interest rates on their savings – although insolvency experts have credited low interest rates with helping people’s borrowing costs and keeping personal insolvencies down.

Almost one third (31 per cent) people surveyed cut back spending on essentials last month, and they were most likely to be women aged between 30 to 49 years old.

Over two thirds (68 per cent) of people across the survey described the state of the economy as poor, although 9 per cent said it is good.

Around 2,000 people took part in the survey last month across the UK.

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