By Laurence Dollimore For Mailonline
Published: 07:19 EDT, 7 July 2022 | Updated: 12:00 EDT, 8 July 2022
More than a third of Britons are 'struggling financially' amid the worst cost of living crisis since the 1970s, a new poll has found - as inflation looks set to soar to 11 per cent by October, placing even more pressure of the average Brit's purse strings.
According to the 'wealth and wellbeing' survey of 4,000 people, carried out by insurance firm LV= last month, more than half of adults - 53 per cent - say their finances have worsened over the last quarter.
LV= said the findings are the most negative since June 2020, when its quarterly survey first began - and many Brits predict things will get worse, with 43 per cent expecting their finances to deteriorate over the next few months.
It comes after families up and down the country this week united in horror at the rising cost of their weekly shop, particularly after a 750g tub of Lurpak butter went on sale at Sainsbury's for £7.25 - before a large 1kg tub was seen retailing at close to a tenner (£9.30) in Iceland yesterday.
In fact butter and milk, alongside meat and dog food, have been named as the worst offenders by market researchers Kantar, who say grocery prices are rising at the fastest rate in 13 years.
The situation has come about thanks to a perfect storm of surging post-pandemic demand and rising energy, fuel and transport costs, made worse by the invasion of Ukraine and the resulting shortage of grain.
Exacerbating their financial woes, six in 10 Brits told LV= researchers that their total monthly outgoings had increased over the previous three months, while three in 10 (30 per cent) said the amount they are saving had fallen over the same period.
More than half of adults - 53 per cent - say their finances have worsened over the past three months, according to the 'wealth and wellbeing' survey of 4,000 people, carried out by insurance firm LV= last month (stock image)
A nationwide survey of 4,000 households found that 56 per cent are buying fewer groceries as a result of spiralling prices
Nearly six in 10 (58 per cent), meanwhile, have seen an increase in their supermarket spending, while 31 per cent have been forced to spend less money on socialising.
More than a third (36 per cent) of UK adults surveyed described their financial situation as 'struggling' - and LV= said this has increased each quarter over the past year.
The latest Wealth & Wellbeing survey by insurance firm LV= has painted a gloomy picture when it comes to the average Brit's financial concerns.
Statistics collected by The Grocer from the Retail Price Index also show the rising prices in supermarkets.
Below are what the poll of 4,000 people, carried out in June, and the latest statistics, mean for the average Briton:
12% - the average price increase of a weekly supermarket shop
30% said they are having to spend less money on socialising
36% described their financial situation as 'struggling'
38% of Brits are worried about money
43% expect their finances to deteriorate over the next quarter
46% of 18-34-year-olds are worried about money
53% say their finances have worsened in the past three months
61% said their total monthly outgoings had increased over the last quarter
Nearly two-fifths (38 per cent) are worried about money, rising to 46 per cent of 18 to 34-year-olds and 44 per cent of parents with children aged 10 years old or under.
Clive Bolton, managing director of protection, savings and retirement at LV said: 'The results of the latest LV= Wealth and Wellbeing Monitor highlight how the finances of millions of people are being squeezed by the large rise in the cost of living.
'The indices for savings, financial outlook and outgoings are the worst recorded since we started surveying consumers during the coronavirus pandemic, and worse than in the dark days of Covid.
'Consumer sentiment had been steadily improving between spring and early autumn 2021 but the sharp rise in the cost of living has dented consumers' confidence.
'Millions of people say they are struggling financially and standards of living are falling across the country.
'Rising energy prices are becoming a significant problem for many people, and many families with young children and low income households are struggling.'
It comes as a separate survey of 4,000 households, by research firm Kantar, found that 56 per cent are buying fewer groceries as a result of spiralling prices, with the same proportion skipping meals in a bid to save money.
Leading coffee chain Costa has hiked its prices not once but twice since December, with a small cappuccino now costing a whopping £3.05.
Experts claim many of the increases come from rising farming costs, with fertiliser, animal feed and fuel all more expensive than they were six months ago.
These are being passed down to consumers, via suppliers such as supermarkets and coffee shops, hiking the prices of everyday basics.
These costs, in turn, can be linked to the Russian invasion of Ukraine in February, which has had a knock-on effect on energy bills, supply chains and commodities exported from both countries, namely wheat, corn and sunflower oil, as well as building materials and computer chips.
Combine that with the aftermath of a pandemic, which led to global shortages, production freezes and staffing problems, and it's no wonder our food bills are rocketing.
A 750g tub of Lurpak butter made headlines this week after stunned shoppers found it on sale at Sainsbury's for £7.25
Worryingly, Simon Roberts, chief executive of Sainsbury's, warned yesterday that the strain of rising prices 'will only intensify over the remainder of the year'.
'The effects of this are going to last longer than I am sure most people expected,' he added.
'The price of food, fuel, fertiliser and labour have all gone up. We are seeing substantial cost impacts and they are not going to go away tomorrow.'
In an attempt to offer relief to some of the hardest hit, a package of cost-of-living support measures will kick in in the days and months ahead.
More than eight million households will start to see cost-of-living payments hit their bank accounts on July 14.
From that date, a first instalment of £326 will start to be paid out to low-income households on benefits, the Department for Work and Pensions (DWP) previously announced.
The second portion of the one-off £650 payment will follow this autumn.
Pensioner households are also set to receive an extra £300 to help cover the rising cost of energy this winter, while people on disability benefits will receive an extra £150 payment in September.
From October, households will have £400 taken off energy bills.
The threshold for paying National Insurance (NI) was also raised to £12,570 this week, meaning many people will see an income boost in their July pay packets.
However, this follows a controversial 1.25 percentage point increase in NI earlier this year to pay for health and social care.
Commentators have also recently highlighted how frozen income tax thresholds are pushing more people into paying higher tax bills, as wages rise.
It comes as data from comparison site trolley.co.uk revealed this week that a standard 500g pack of Lurpak spreadable butter is up around £2.25 to £5 in the past year and is also being security tagged. Sainsbury's is selling a 750g tub of Lurpak for £7.25 - up from £5.90 in recent months.
Meanwhile, to counter the growing threat of shoplifting, Tesco has fitted security tags to tubs of baby milk. The cans of the formula are being protected at Tesco Extra in Streatham, south London. It follows Sainsbury's recently tagging tubs of Aptamil baby, toddler and follow-on milks.
Justifying putting tags on more foods, a Co-op spokesman said: 'Co-op has been involved in a small scale trial of new packaging for higher value products for well over a year, with the additional security providing a further deterrent if a store locally experiences shoplifting issues'.
It came after the boss of Sainsbury's warned yesterday that pressure on household budgets 'will only intensify over the remainder of the year' amid the worst inflation crisis in the UK for decades, while Tesco is running out of Heinz baked beans and ketchup due to a stand-off with the US food producer over price increases.
In Iceland, a 1kg pack of Lurpak slightly salted butter is being sold for £9.35. At Ocado, the only other major supermarket where that size is on sale, it is priced at £9
Photos posted to social media showed £3.99 blocks of cheddar on shelves in Aldi, Wolverhampton, with electronic tags fitted to them (pictured)
Another image showed a 750g pack of Lurpak butter with a security label on it (pictured)
Meanwhile, Tesco has fitted security tags to tubs of baby milk. Cans of the formula milk - some of which were priced at £15 - are being protected at Tesco Extra in Streatham, south London
Families are officially suffering the worst squeeze on record after real disposable incomes fell for the fourth quarter in a row.
Finances failed to keep up with soaring inflation once again at the start of the year, making it the longest sequence of drops since official figures started being compiled in 1955.
Real household disposable income was down 0.2 per cent between January and March, as income growth of 1.5 per cent was outstripped by household inflation of 1.7 per cent.
Household finances have now been under pressure for a straight year with costs of energy, food and other goods spiking after Covid and with the Ukraine crisis raging.
Meanwhile, HMRC figures have shown nearly two million people have been dragged into the higher and additional rates of tax over the past three years.
Underlining the burgeoning burden on workers, 6.1million are projected to be paying income tax at 40 per cent or 45 per cent in 2022/23.
Simon Roberts, chief executive of the supermarket group, said it is working to reduce costs across its operations amid continued inflation.
'We really understand how hard it is for millions of households right now and that's why we are investing £500 million and doing everything we can to keep our prices low, especially on the products customers buy most often,' he said.
'The pressure on household budgets will only intensify over the remainder of the year and I am very clear that doing the right thing for our customers and colleagues will remain at the very top of our agenda.'
Sainsbury's is selling the Lurpak butter at the sky-high price despite the fact that many of its rivals are offering it cheaper. Tesco is selling the same pack for £5.30, whilst Asda, Iceland and Ocado are selling it for £6.
The luxury butter brand, first produced in Denmark in 1901, has become a staple for millions of households across the country. But families might soon be turned off by the eyewatering cost a pack.
The news comes amid the worst cost of living crisis since the 1970s stoked by rampant inflation - with experts warning that the worst could be yet to come.
Sarah Coles, of finance firm Hargreaves Lansdown, said that pressures on household finances are 'laying waste' to the 'extra resilience' that was built up by Britons during the pandemic.
At Tesco, it is understood staff were forced to protect baby milk products after a spate of thefts.
The tags operate via a transmitter that sounds out an alert when it is removed from a shop.
They are usually removed by staff when customers pay at the till.
There are fears struggling mums and dads are turning to crime to help feed their little ones amid the cost of living crisis.
A spokesman for Tesco declined to comment.
Sainsbury's this week revealed that like-for-like sales, excluding fuel, declined by 4 per cent over the 16 weeks to June 25, compared with the same period last year.
At Tesco, it is understood staff were forced to protect baby milk products after a spate of thefts. The tags operate via a transmitter that sounds out an alert when it is removed from a shop
Sainsbury's hailed a 'good' performance in its grocery business, which saw sales dip 2.4% against levels from last year, which had benefited from pandemic restrictions on other parts of the retail sector.
Sainsbury's boss Simon Roberts has warned that pressure on household budgets 'will only intensify over the remainder of the year'
The retailer said its 'improved value position' has helped its performance against competitors, with the group investing heavily into improving prices, such as through its Sainsbury's Quality, Aldi Price Match campaign.
Sales were also particularly strong around the Jubilee week, the company said, with sales of beers, wines and spirits at 'the highest ever outside of Christmas and Easter, with Pimm's, sparkling wine and champagne selling particularly well'.
The total sales decline was dragged lower by significant slumps in the group's clothing and general merchandise divisions, which includes its Argos brand.
Argos sales fell by 10.5 per cent over the period, which it said was driven by a heavy slump over the first five weeks.
The group also revealed that fuel sales jumped 48.3 per cent over the period, driven by jumps in the price of both petrol and diesel.
Mr Roberts added: 'We're working hard to reduce costs right across the business so that we can keep investing in these areas that customers care most about.
'The progress we are making on improving value, quality, innovation and service is reflected in our improved grocery volume market share.'
Ms Coles, senior personal finance analyst at Hargreaves Lansdown, warned today: 'The cost-of-living crisis is laying waste to the extra resilience we managed to build during the pandemic.
'It's hitting those on lower incomes the hardest, leaving them with an impossible challenge to stay on top of their finances. And it's not just causing huge problems right now, it's building them for the future too.'
Research produced by Hargreaves Lansdown found that, in the past three months, 41 per cent of households dipped into savings or borrowed money to cover their costs.
Once inflation is taken into account, disposable income fell 3 per cent in the past three months, the report also found.
It comes after it emerged a typical family of four's shopping bills could rise as much as £40 per month in the latest pinch on domestic finances as essentials such as bread and dairy look set to rise.
And the staggering rise in prices doesn't just stop at dairy products.
Recent Retail Price Index figures for food bought by ordinary shoppers showed the average price of a roasting joint of beef had risen by 9.8 per cent to £11.34 over the year to April, while chicken had risen by 10.4 per cent to £3 a kilo.
Real household disposable income was down 0.2 per cent between January and March, as income growth of 1.5 per cent was outstripped by household inflation of 1.7 per cent. It is the longest sequence of drops since official figures started being compiled in 1955
HMRC figures have shown nearly two million people have been dragged into the higher and additional rates of tax over the past three years
But caterers are reporting even more dramatic rises of between 20 and 30 per cent for many products, with prices often changing by the week.
The cost of minced beef rose by 11 per cent overnight in recent days, Laca said, while one catering company saw the cost of 10kg of prepared potatoes increase from £10.46 to £15.50.
Elsewhere, Heinz staples such as baked beans, ketchup, salad cream and soup soared in price by up to 55 per cent in June.
Data from retail research experts Assosia shows the price of Heinz beans is up a third in Asda since June 17 - up from 90p to £1.20 per can - while a standard bottle of Heinz squeezy ketchup is up 39 per cent in Morrisons, from £2 to £2.79.
Cans of Heinz soups, including family favourite Cream of Tomato, have also gone up. The price of a 4x400g pack has increased 40 per cent from £2.50 to £3.50 in Sainsbury's. In Asda a single can has gone up from 90p to £1.40.
A 4x200g pack of baked beans Snap Pots is up 20 per cent from £2.50 to £2.99 in Morrisons this month. While a small 200g can of Heinz beans with sausages appears to almost doubled from 65p to £1.20 in Asda.
The UK economy is facing its 'strongest period' of inflationary pressure since the 1970s, with the conflict in Ukraine worsening the impact by restricting supply chains and pushing up grain prices.
This has been compounded by the fact that Ukraine and Russia are both big global grain producers, collectively accounting for nearly a third of global wheat exports.
Products that use grain such as bread and products containing meat from animals fed on grain, for example chicken, are to increase in price over summer and autumn as a result, said the Institute of Grocery Distribution.
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