Impact of increased cost of living on adults across Great Britain: February to May 2023

In this article, we have identified groups of the population experiencing financial vulnerability in Great Britain. In the period, 8 February to 1 May 2023, using the Opinions and Lifestyle Survey (OPN), we found:

• renters (4.7 higher odds) and mortgage holders (2.0 higher odds) had higher odds of experiencing financial vulnerability compared with those who own their home outright

• the difference between renters' and mortgage holders' likelihood of experiencing some form of financial vulnerability may reflect that, on average, renters report spending a higher proportion of their disposable income on rent (21%), than mortgage holders on their mortgage (16%), according to the latest data from the Living Cost and Food Survey (UK, financial year ending 2022)

• other groups with higher odds of experiencing financial vulnerability included adults aged 25 to 34 years (3.4 higher odds compared with those aged 75 years and over) and disabled adults (1.9 higher odds compared with non-disabled adults)

Examining groups of the population who were having difficulty with their rent, mortgage or affording food shopping specifically, we found:

• around a third (35%) of adults reported it was difficult (very or somewhat) to afford their rent or mortgage payments, this proportion appeared higher among groups including; those receiving support from charities (57%), living in a household with one adult and at least one child (47%), receiving some form of benefits or financial support (45%), Asian or Asian British adults (53%), Black, African, Caribbean or Black British adults (47%), renters (43%) and disabled adults (41%)

• around 4 in 10 (43%) renters reported that it was difficult to afford their rent payments, and around 3 in 10 (28%) mortgage holders reported it was difficult to afford their mortgage payments

• around 1 in 20 (5%) of adults reported that in the past two weeks they had ran out of food and had been unable to afford more, this proportion appeared higher among groups including; those receiving support from charities (45%), living in a household with one adult and at least one child (28%), receiving some form of benefits or financial support (21%), Mixed or Multiple ethnicity adults (14%), Black, African, Caribbean or Black British adults (13%), renters (14%) and disabled adults (9%)

Our latest Public opinions and social trends, Great Britain bulletin reported that, during the period 28 June to 9 July 2023, around 9 in 10 adults (92%) see the cost of living as an important issue facing the UK. Around 6 in 10 (60%) adults reported that their cost of living had increased compared with a month ago. 

Commonly reported reasons among adults who said their cost of living had increased compared with a month ago continue to be an increase in:

• the price of food shopping (96%)
• gas or electricity bills (57%)
• the price of fuel (37%)
• rent or mortgage costs (27%)

These reported experiences reflect our inflation data, which shows that food and non-alcoholic beverage prices rose by 18.4%, in the year to May 2023 (Figure 1). For further information about our inflation data, see our Consumer price inflation, UK: May 2023 bulletin.

Throughout the rest of this article, we have used a larger pooled dataset covering 8 February to 1 May 2023 (the "latest pooled period"), to explore how the rising cost of living is impacting different groups of the population. This article highlights some of these differences, however further data can be found in the accompanying dataset.

Survey respondents were asked: "Finally, in your own words, tell us about your experiences with the increases in cost of living." We use quotes from responses to this question to illustrate our findings throughout this article. Quotes are sometimes shortened, as indicated by [...], to enable ease of reading. The underlying meaning of the quote remains the same. Information about further analysis of these responses is available in Section 6: Lived experience of increases in the cost of living and Section 9: Data sources and quality.

We identified groups of the population who were more likely to be experiencing financial vulnerability.

A person was considered to be experiencing financial vulnerability if three or more of the following applied to them:

• being unable to afford an unexpected, but necessary, expense of £850

• borrowing more money or using more credit than usual, in the last month, compared with a year ago

• being unable to save in the next 12 months

• finding it very or somewhat difficult to afford energy bills

Figure 2 shows trends over time in the proportion of adults reporting each of these.

Around a quarter (24%) of all adults were experiencing some form of financial vulnerability in the latest pooled period, a similar proportion to the period September 2022 to January 2023 (23%).

We conducted a logistic regression analysis that assessed the likelihood of experiencing financial vulnerability, after controlling for a variety of personal characteristics.

This analysis technique helps account for an individual groups pattern of other characteristics. For example, those who own their homes tend to be older, have higher incomes, and live in smaller household sizes, according to the latest data from the English Housing Survey 2021 to 2022: headline report.

We found that the groups of the population with the highest odds of being financially vulnerable in the latest pooled period remained similar to the period September 2022 to January 2023, as shown in our Impact of increased cost of living on adults across Great Britain bulletin. These included:

• renters (4.7 higher odds) and mortgage holders (2.0 higher odds), who had higher odds of experiencing financial vulnerability, compared with those who own their home outright

• adults with a personal annual income of up to £10,000, who had higher odds of experiencing financial vulnerability (3.8 higher odds), compared with adults earning £50,000 or more per year 

• adults aged 25 to 34 years, who had higher odds of experiencing financial vulnerability (3.4 higher odds), compared with those aged 75 years and over

• disabled adults, who had higher odds of experiencing financial vulnerability (1.9 higher odds), compared with non-disabled adults

Figure 3: Renters had around five times the odds of experiencing some form of financial vulnerability, compared with those who own their home outright

Great Britain, 8 February to 1 May 2023

Notes:

1. An odds ratio indicates the likelihood of experiencing some form of financial vulnerability given a particular characteristic.

2. Confidence intervals may appear to be unequal because of rounding.

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Estimates for other groups of the population considered are available in the accompanying dataset. For more information on the regression analysis, see Section 9: Data sources and quality.

Our latest Public opinions and social trends, Great Britain: 28 June to 9 July 2023 bulletin shows that around half of adults (48%) who currently pay rent or a mortgage reported that their payments had increased in the last six months. This proportion has gradually increased since February 2023.

In the latest pooled period, we found that those renting (42%) were more likely to report an increase in their payments than mortgage holders (32%).

According to data from our Index of Private Housing Rental Prices, UK: May 2023 bulletin, private rental prices paid by tenants in the UK increased by 5.0% in the 12 months to May 2023. This represents the largest annual percentage change since this UK series began in January 2016.

While interest rates have been increasing since the start of 2022, as shown on the Interest rates and Bank rate webpage from the Bank of England, many fixed rate mortgage borrowers have so far been insulated from these increases. Analysis of Bank of England data in our How increases in housing costs impact households article, shows that most mortgages are agreed at a fixed interest rate, where the interest rates stay the same for the duration of the mortgage deal. Around 9 in 10 (88%) outstanding UK mortgages were being repaid through fixed interest rate mortgages in Quarter 1 (Jan to Mar) 2023.

Difficulty affording rent or mortgage payments

Groups of the population who were more likely to report finding it very or somewhat difficult to afford their rent or mortgage payments in the latest pooled period included:

• around 4 in 10 (43%) renters, compared with 28% of mortgage holders

• around 4 in 10 among adults within the lowest four quintiles of annual personal income (39% in the lowest quintile, 41% in the second, 38% in the third, 38% in the fourth), compared with 26% of those in the fifth and highest quintile (for more information on personal annual income quintiles, see Section 8: Glossary)

• around 4 in 10 (41%) among disabled adults, compared with 32% of non-disabled adults

• around 6 in 10 (57%) among adults who report receiving support from charities, including foodbanks, because of increases in their cost of living, compared with 34% among adults who do not receive support from charities

• around half (47%) among adults living in a household with one adult and at least one dependent child, compared with 36% among adults living in a household with more than one adult and at least one dependent child and 34% among adults not living with a dependent child

• over 4 in 10 (45%) among adults receiving some form of benefit or financial support (for more information on the definition of this group, see Section 8: Glossary), compared with 33% among adults who were not

• around half among Asian or Asian British adults (53%) or Black, African, Caribbean or Black British adults (47%), compared with 33% among White adults

Estimates among all adults and by a selection of personal characteristics considered in this analysis are shown in Figure 5.

Figure 5: Difficulty affording rent or mortgage payments among different groups of the population

Proportion of adults finding it somewhat or very difficult to afford rent or mortgage payments, Great Britain, 8 February to 1 May 2023

Notes:

1. Question: “How easy or difficult is it to afford your rent or mortgage payments?”.

2. Base: adults who are currently paying rent or mortgage.

3. Confidence intervals may appear to be unequal because of rounding.

4. Parental status categories are not mutually exclusive.

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Impact of cost of living increases on renters

New analysis from the Living Cost and Food (LCF) survey for the financial year ending 2022 reflects some of the reasons why renters might currently report more difficulty than mortgage holders. The analysis showed that renters (21%) spent a higher proportion of their average weekly disposable income on housing costs (rent or mortgage) compared with mortgage holders (16%). These estimates and how they varied among renters and mortgage holders by age group, sex and income are available in the accompanying dataset.

Analysis of the latest pooled period (8 February to 1 May 2023) of the Opinions and Lifestyle Survey (OPN) survey suggests spending a higher proportion of disposable income on housing costs could be affectcting the ability of renters to afford other essential costs.

Adults renting were more likely than mortgage holders to report:

• spending less on food shopping and essentials (58% of renters, compared with 48% of mortgage holders)

• running out of food in the past two weeks (14%, compared with 3%)

• being behind on gas or electricity payments (13%, compared with 4%)

• having a direct debit or standing order that they have been unable to pay in the past month (19%, compared with 4%)

• using support from charities (8%, compared with 1%)

Adults renting were less likely than mortgage holders to report that they:

• will be able to save any money in the next 12 months (26%, compared with 48% of mortgage holders)

• were using savings because of increases in the cost of living (22%, compared with 29%)

Estimates from the latest pooled period by these and all other personal characteristics considered in this analysis (including employment status, highest education level, the country and region, urban or rural nature, or level of deprivation of the area in which adults live) can be found in the accompanying dataset.

Pressures on cost of living from food prices remain, our latest Public opinions and social trends, Great Britain: 28 June to 9 July 2023 bulletin shows that among all adults the most commonly reported reason for an increase in cost of living, compared with a month ago, is an increase in the price of food shopping (96%).

This latest data also shows that around half of adults reported spending more than usual to get what they usually buy (45%) or buying less food (48%) in the last two weeks. Around 1 in 20 (5%) reported they or their household had run out of food and not been able to afford more.

These proportions appear relatively stable during 2023 (Figure 6), this may be because of other changes in behaviour as adults adapt to consistently high prices. For example, there is evidence that consumers have been changing to cheaper supermarket own-brand products, with total spending on value range products increasing 41% in the past year, as shown in Kantars release on grocery price inflation.

High food prices may also impact people's ability to afford healthy choices. The Food Foundation reported that the most deprived fifth of the population need to spend 50% of their disposable income on food to meet the cost of the Government recommended healthy diet, compared with 11% among the least deprived fifth.

Using the latest pooled period to examine this further, groups of the population who were more likely to report that in the past two weeks they or their household had run out of food and not been able to afford to buy more included:

• around 1 in 7 (14%) renters, compared with 3% of mortgage holders

• around 1 in 10 (9%) among adults in the lowest quintile of annual personal income (7% in the second, 6% in the third, 4% in the fourth), compared with 1% of those in the fifth and highest quintile

• around 1 in 10 (9%) among disabled adults, compared with 4% of non-disabled adults

• around half (45%) among adults who report receiving support from charities because of increases in their cost of living, compared with 4% among adults who do not

• around a quarter (28%) among adults living in a household with one adult and at least one dependent child, compared with 7% among adults living in a household with more than one adult and at least one dependent child and 4% among adults not living with a dependent child

• around 1 in 5 (21%) among adults receiving some form of benefit or financial support, compared with 3% among adults who were not (for more information on the definition of this group, see Section 8: Glossary

• around 1 in 7 among Black, African, Caribbean or Black British adults (13%) or Mixed or Multiple ethnic group adults (14%), compared with 5% among White adults and 6% among Asian or Asian British adults.

Figure 7: Running out of food and being unable to afford more among different groups of the population

Proportion of adults who report running out of food, in the past two weeks, and being unable to afford to buy more, Great Britain, 8 February to 1 May 2023

Notes:

1. Question: “In the past two weeks, have you or your household run out of food and could not afford to buy more?”.

2. Base: all adults.

3. Confidence intervals may appear to be unequal because of rounding.

4. Parental status categories are not mutually exclusive.

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Although around half of all adults (50%) reported buying less than usual in the past two weeks, some groups of the population were less likely to report taking this action. This included those:

• in the highest quintile of personal income (41%)
• aged 70 years and above (35%)
• who owned their home outright (37%)

Estimates regarding people's experiences when food shopping by all personal characteristics considered in this analysis (also including employment status, highest education level, the country and region, urban or rural nature, or level of deprivation of the area in which adults live) can be found in the accompanying dataset.

Between 19 April and 1 May 2023, survey respondents were asked; "Finally, in your own words, tell us about your experiences with the increases in cost of living." Quotes used throughout this article highlight responses that relate to the quantitative findings shown. 

Using Natural Language Processing (NLP) (see Section 8: Data sources and quality), we identified five overarching themes, which highlight the perceptions and lived experience respondents had of the rising cost of living.

"Well-being and worries about the future"

Respondents described issues relating to personal well-being and their worries about the future considering the rising cost of living, which was described in terms of a drain on energy and vitality, dominating every-day conversations in a negative way, and having a mental health impact. 

"Response by government and businesses"

Respondents described concerns related to companies making profit despite the rises in the cost of living and raised questions regarding the government's response. 

"Worry about others"

Respondents expressed a range of worries about both people close to them or in the general population.

"Shopping habits"

Respondents described changes to their shopping habits and behaviours in response to the increases in the cost of living, such as:

• shopping less

• wearing warm clothing instead of turning the heating on

• spending less on non-essentials

• shopping around

"Widening inequality"

Respondents described their perceptions of growing inequalities and their sentiments regarding this.

The themes resulting from this initial qualitative analysis will be used to guide future analysis in our Impact of increased cost of living on adults across Great Britain series. For more information about these themes, see Section 9: Data sources and quality. 

Disability status

To define disability in this publication, we refer to the Government Statistical Service (GSS) harmonised "core" definition of disability: this identifies "disabled" as a person who has a physical or mental health condition or illness that has lasted or is expected to last 12 months or more that reduces their ability to carry-out day-to-day activities. The GSS harmonised questions are asked of the respondent in the survey, meaning that disability status is self-reported.

Ethnicity

The ethnicity disaggregation used has been chosen to provide the most granular breakdown possible, while producing robust estimates based on sample sizes, in line with harmonised standards for ethnicity data.

The five-category ethnicity breakdown includes:

• Asian or Asian British: Indian, Pakistani, Bangladeshi, Chinese or any other Asian background

• Black, African, Caribbean or Black British: African, Caribbean or Any other Black, African or Caribbean background

• Mixed and Multiple ethnic groups: White and Black Caribbean, White and Black African, White and Asian or Any other Mixed and Multiple ethnic background

• Other ethnic background group: Arab or Any other ethnic group

• White: White British, White Irish, Other White

Logistic regression

We carried out a logistic regression analysis to identify the individual characteristics associated with financial vulnerability. This further allows us to identify someone with a particular characteristic having higher or lower odds of experiencing some form of financial vulnerability when compared with a specified reference group, after taking other possible characteristics into account.

For example, if a particular group has an odds ratio of more than one, they are more likely than the reference group to be considered financially vulnerable when compared with the reference group.

Odds ratio

An odds ratio indicates the likelihood of experiencing some form of financial vulnerability given a particular characteristic. When a characteristic has an odds ratio of one, this means there is neither an increase nor a decrease in the likelihood of experiencing some form of financial vulnerability compared with the reference category. An odds ratio greater than one indicates an increased likelihood of experiencing some form of financial vulnerability compared with the reference category. An odds ratio less than one indicates a decreased likelihood of experiencing some form of financial vulnerability compared with the reference category.

Parental status

An adult is defined as a parent if they are the parent of a dependent child living in the household. Dependent children in this case includes children and stepchildren.

Parents were classified into two further groups; having a dependent child aged under 5 years or having a dependent child aged 5 years and over living in the household. Where parents have multiple dependent children in their household, they are included in a group based on the age of their youngest dependent child in their household.

A dependent child is someone aged under 16 years or someone who is aged 16 to 18 years, has never been married and is in full-time education.

Personal annual income

Personal annual gross income is self-reported on the Opinions and Lifestyle Survey (OPN) and therefore should be treated with caution.

A respondent's income information does not represent equivalised household income, that considers that households with more people will need a higher income to achieve the same standard of living as households with fewer members.

Those reporting no source of income may include those dependent on other members of their household, such as people aged 16 to 19 years who are in full-time education.

Income quintiles are calculated by ranking respondents from lowest to highest reported personal annual gross income and dividing them into five equal groups.

Those in the lowest quintile are those with a personal annual income below £11,230. Those in the lowest quintile could include those who have retired but still have other sources of income, in addition to those who are in employment but receiving a relatively low income.

Those in the highest quintile are those respondents with a personal annual income over £38,400.

Not all respondents provided information on their personal annual gross income, with some only able to provide a banded estimate or providing no information. These respondents are excluded from any analysis by income quintile.

Receiving support from charities

Receiving support from charities refers to a respondent self-reporting on the OPN "Using support from charities, including food banks" in response to the question "Which of these, if any, are you doing because of the increases in the cost of living? I am...".

Receiving benefits or financial support

Receiving benefits or financial support refers to a respondent self-reporting receiving income support, tax credits or universal credits, or other state benefits as one of their sources of income on the OPN. Those who reported receiving a state pension or child benefits only are not included in this category.

Statistical significance

This article presents a summary of results, with further data including confidence intervals for the estimates shown in the charts presented contained in the associated datasets. Where comparisons between groups are presented, 95% confidence intervals should be used to assess the statistical significance of the change.

For the regression analysis, characteristics were found to be significant based on the p-value associated (Wald Chi-Squared Test) with each characteristic. The odds ratios were then assessed alongside a confidence interval around each category of interest.

Quality

More quality and methodology information on the Opinions and Lifestyle Survey (OPN) and its strengths, limitations, appropriate uses, and how the data were created is available in our Opinions and Lifestyle Survey Quality and Methodology Information. 

Sampling

The analysis throughout this article is based on adults aged 16 years and over in Great Britain. The analysis in this report is based on 14,821 adults from a pooled dataset comprising six waves of data collection, covering the following periods:

• 8 to 19 February 2023
• 22 February to 5 March 2023
• 8 to 19 March 2023
• 22 March to 2 April 2023
• 5 to 16 April 2023
• 19 April to 1 May 2023

Further information on the survey design and quality can be found in our Opinions and Lifestyle Survey Quality and Methodology Information.

Weighting

Survey weights were applied to make estimates representative of the population.

Weights were first adjusted for non-response and attrition. Subsequently, the weights were calibrated to satisfy population distributions considering the following factors: sex by age, region, tenure, highest qualification and employment status.

For age, sex and region, population totals based on projections of mid-year population estimates for June 2021 were used. The resulting weighted sample is therefore representative of the Great Britain adult population by a number of socio-demographic factors and geography.

Comparing over time

Changes were made to the survey methodology in the latest pooled period, 8 February to 1 May 2023; therefore, comparisons with previous pooled periods should be treated with caution.

Regression analysis

The analysis from the regression model presented in this article identifies differences between adults who were considered to be financially vulnerable (dependent variable), when compared with adults not considered to be financially vulnerable, while controlling for a range of characteristics (independent variables).

Three logistic regression models were produced to explain the relationships between the dependent and independent variables. These were:

• unadjusted: these models show the relationship between the dependent variable, and an independent variable of interest (characteristic)
• age and sex adjusted: these models looked at the same dependent and independent variables of interest while also controlling for age and sex
• fully adjusted: these models looked at the same dependent variable and a range of independent variables (characteristics) of interest while controlling for all variables

Missing values were excluded from the regression analysis where a response was not provided for a question or variable included in the model. As a result, 12,688 adults were included in the fully-adjusted regression model analysis.

The results of the modelling and a full breakdown of sample sizes and population estimates for each of the characteristics included in the fully adjusted regression model are available in the accompanying dataset.

Qualitative analysis

Between 19 April and 1 May 2023, survey respondents were asked; "Finally, in your own words, tell us about your experiences with the increases in cost of living." Latent Dirichlet Allocation (LDA) topic modelling (a Natural Language Processing method) was used on over 1900 responses.

A review of this by multiple experienced qualitative researchers, led to the agreement of a five-theme model:

• "Well-being and worries about the future"

• "Response by government and businesses"

• "Worry about others"

• "Shopping habits"

• "Widening inequality"

The qualitative researchers reviewed a total of 10 responses per theme. This was to label these themes and summarise the overall meaning of that theme using a range of supporting quotes from the respondents in the survey. 

All survey responses were anonymous and any potentially identifying information has been removed from the quotes.

Acknowledgements 

The qualitative analysis shown in this article was conducted by: 

• Graham Brennan

• Priya Tanna

• Mercedesz Soos

New analysis from the Living Costs and Food Survey for the financial year ending 2022 was conducted by:

• Lee Colvin

• Paula Croal