Financial News

  • 7 May 2013, 9:41

Struggling Families Using Loans To Buy Food

Five million families in Britain are approaching financial "breaking point" and struggling to pay for food, according to research.

One in five households said their monthly incomes would not stretch to cover all of their food costs in April and they had to use some form of borrowing such as a credit card, overdraft or loan, or plunder their savings instead, consumer group Which? found.

Which? said this would equate to five million families if the findings were projected across the UK.

The findings provide an indication of the numbers of people who are struggling, despite official figures showing last week that personal insolvencies have fallen to their lowest level in five years.

The group who could not cover their food bills from their income alone was largely made up of low-income households earning less than £21,000 a year and squeezed 30 to 49-year-olds, many of whom had children.

Some 82% of these people said that they were worried about food prices and 57% 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% 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, while more than one third (36%) felt squeezed.

Two-thirds were 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%) of people surveyed cut back spending on essentials last month, mainly women aged between 30 to 49 years old.

Over two thirds (68%) described the state of the economy as poor, with just 9% saying it was good.

Around 2,000 people across the UK took part in the survey, which was carried out last month.