Yorkshire Building Society releases Inflation nation

Yorkshire Building Society releases Inflation nation | YBS

11/05/22

Increasing energy and fuel costs to drive up weekly household spending to £705 by 2024
Yet weekly incomes will rise to just £680, leaving the average British household £25 a week – or £100 a month – short
This equates to a £2.8bn deficit each month across all UK households
Four in ten (39%) of savers have already dipped into their savings to cover the cost of living in the last 12 months#

Yorkshire Building Society releases its Inflation Nation report on the changes in the cost of living

The average UK household will be short of a £100 a month by 2024, as the cost of living crisis means expenses will outpace incomes. The figures come from Yorkshire Building Society’s Inflation Nation report and reveal that weekly household spending is set to rise to £705 in just two years’ time.

However, the report, which was conducted in partnership with the Centre for Economics and Business Research (Cebr), shows that real weekly incomes will rise to just £680, leaving households short of £25 a week, or roughly £100 a month.

Yorkshire Building Society’s study seeks to understand how prepared UK adults are to cope with the cost of living crisis. It reveals that despite incomes remaining slightly higher than expenses in 2021 (£596 versus £595, respectively), the rising cost of living has already forced nearly four in ten savers (39%) to dip into their savings in the last 12 months.

Almost a quarter of those savers (23%) said they had dipped into their savings by between £200 and £499, while more than one in ten (12%) said they had done so by between £500 and £999. Almost a fifth (17%) said they had dipped into their savings by over £1,000.

This latest report comes as the Resolution Foundation predicts that the ongoing crisis will push 1.3 million less financially resilient people into poverty. Indeed, 15% of those surveyed said they had under £500 in savings – while 17% said they had no savings at all (please see below for regional breakdowns).

Overall, around four in ten (41%) of those surveyed said they expected their household outgoings to increase by between £101 and £500 each month over the next 12 months – with the areas causing most concern being utility prices (70%), food and drink prices (60%), and fuel prices (58%).

The research showed that by 2024, housing and utilities costs are expected to reach £100.83 a week, up from £84.59 in 2021. Meanwhile average low weekly transport costs due to some workers shifting to home-working throughout the pandemic are now set to rise by more than £40 a week or £170 pounds a month.

More than two-thirds (67%) of those surveyed said they are worried about the impact the crisis will have on them; and almost half (46%) say the crisis is already having a negative impact on their mental wellbeing.

Stephen White, Interim Chief Executive of Yorkshire Building Society comments on the findings:

We may be emerging from the global pandemic, but our figures indicate we are moving from one crisis to another.

Inflation is already high and this, coupled with increasing energy price caps and fuel charges, means there could be challenging times ahead for many households.

Families across the UK are already having to budget carefully in order to make ends meet. Some have accrued savings over the course of the pandemic, which can help foot monthly bills. Others simply do not have the financial resilience to withstand rising costs.

Whatever people’s current financial situation, it is important they take action now in order to limit the damage the cost of living crisis could cause. Researching ways to cut costs and make the most of services available is paramount – even for those who may feel relatively resilient.

Nitesh Patel, strategic economist at Yorkshire Building Society, adds:

Costs are rising at a considerably higher rate than income, and will soon overtake income altogether. This level of inflation will see savings quickly depleted for those who have them if action is not taken.

The concern is not only the here and now – but the knock-on effect of depleted savings for the future. Those planning to buy a home, for example, may have to wait considerably longer whilst they build up their savings again.

Those who are less financially resilient are encouraged to seek help from organisations such as Citizens Advice so that they can navigate the coming months – and potentially years – without getting into debt, or, indeed, getting into further debt.

Financial institutions, such as our own, have a responsibility to educate people as much as possible about the real impact this crisis can have and offer any guidance we can. We work with Citizens Advice and Age UK, as well as running our own financial education programme, with a view to helping those in need of support.

Yorkshire Building Society remains committed to supporting those people across all ages hardest hit by the cost of living crisis and has committed more than £1.8m of investment over two years (2021/22) to support skills, employment, financial education and wellbeing.

Other initiatives include a partnership with Age UK supporting people in later life with financial wellbeing, an innovative partnership with Citizens Advice to provide free and confidential access to expert advisers for both members and non-members in 18 of the Society’s branches, and investment in its flagship Money Minds financial education programme to reach over 55,000 young people aged 11-19 by the end of this year.

Yorkshire Building Society has a range of support tools available to help people build their financial resilience and take practical steps to saving more. To find out more, please visit Inflation Nation.

Percentage of population with no savings at all by region

Region	Percentage of population with no savings at all
Northern Ireland	30%
North East	27%
Wales	20%
West Midlands	20%
Yorkshire & Humberside	19%
North West	18%
Scotland	18%
UK-WIDE	17%
South East	16%
East of England	14%
London	14%
South West	14%
East Midlands	12%

Percentage of population with no savings at all by major city

City	Percentage of population with no savings at all
Belfast	30%
Newcastle	27%
Cardiff	24%
Glasgow	21%
Sheffield	21%
Birmingham	19%
Leeds	19%
Manchester	17%
UK-WIDE	17%
Plymouth	16%
Southampton	16%
Edinburgh	15%
Brighton	14%
Bristol	14%
Liverpool	14%
London	14%
Nottingham	13%
Norwich	12%

Percentage of population with under £500 of savings by region500 of savings by region

Region	Percentage of population with less than £500 savings
North East	19%
East Midlands	18%
Scotland	17%
Wales	17%
London	15%
East of England	15%
UK-WIDE	15%
North West	14%
South East	14%
Yorkshire & Humberside	13%
West Midlands	13%
South West	13%
Northern Ireland	13%

Percentage of population with under £500 of savings by major city

City	Percentage of population with less than £500 savings
Glasgow	22%
Southampton	20%
Nottingham	18%
Sheffield	18%
Newcastle	17%
Birmingham	16%
Cardiff	16%
Norwich	15%
UK-WIDE	15%
Brighton	14%
Manchester	14%
Liverpool	14%
Belfast	13%
London	13%
Edinburgh	12%
Plymouth	12%
Leeds	11%
Bristol	10%