An increase in the cost of goods and services, coupled with low wage inflation may be behind pressure on household budgets suggested by a report from Halifax.
The report found that 46% of UK households would struggle financially if monthly expenses were to rise by £99. Of those questioned 26% would struggle to cover an increase of £49 and 13% would find it difficult to find just £24 extra each month.
Those in their 40s and 50s felt the most pressure on their budgets, with 18% in each of those age groups admitting that they would find it hard to cope with an extra £24 expenditure per month.
A rise in the cost of household bills may be partly behind those in their 40s and 50s feeling the pressure more, with Halifax reporting that 29% of people in that age group had reported a rise in household bills over the last 12 months.
Similarly, housing and food costs also rose more steeply in the 40s and 50s age group across the last 12 months, than comparable costs for other age groups.
Anthony Warrington from Halifax, said:
"Rising prices are putting disposable income under increasing pressure, but with essentials such as mortgages/rental payments, food, and energy/fuel bills taking up the largest chunk of household spending it leaves some households with little room for manoeuver. Those in their 40s and 50s are most likely to have family living at home, which means their food and energy bills are likely to be higher.
"There is no quick way to ease the squeeze on households and many are already cutting back where they can. With so many households at full stretch it's even more important to make strict budgets and keep on top of finances and outgoings."
The rising cost of living coupled with low wage rises may also be cotributing factors to the pressure on household budgets. Data from the Office for National Statistics said that between March 2012 and 2013 employee regular pay increased by 0.8%, while Consumer Price Index (CPI) inflation rose by 2.8% across the same period. The CPI measures the rising cost of certain goods and services over time. The table below compares Consumer Price Index movement over the last decade with that of regular pay and total pay of employees in Great Britain.
Data and table source: Office for National Statistics
The report by Halifax suggested that a slightly younger age group of those in the 30s and 40s were most anxious about their short term finances (over the next 12 months), while those in their 30s were most worried that they about their ability to save for the future and were the most stressed about whether they would be able to pay off their debts.
"Money worries can be a major headache, but tackling these concerns by keeping on top of your finances can help you to feel more in control.”