British households borrowed with their credit cards last month at the fastest annual rate in more than 17 years, a potential reflection of how consumers are struggling to make ends meet as the spending crisis cost of living increases.
According to data from Bank of EnglandJuly’s annual credit card interest rate was 13% higher than a year earlier, the biggest annual increase since 2005.
Consumer credit rose by £1.4 billion in July, down from a rise of £1.8 billion the previous month, split evenly between credit card borrowing and other forms of consumer credit, such as accounts car assistance.
Inflation ‘could hit 22% next year’, Goldman Sachs warns – latest cost of living
One third of households are having difficulty paying energy bill, one Exclusive poll for Sky News found last week.
That was even before the latest increase in energy price limit which one will increase bills by 80% since October Day 1.
According to an Ipsos poll, one in 10 people find it “very difficult” to buy energy bills for the past three months and two out of 10 indicate it’s “pretty tough”.
Meanwhile, the average interest rate on credit card loans increased by 21.7% to the highest level since 1998.
New data “suggests that consumers are poised against what will almost certainly be a particularly tough winter,” said Thomas Pugh, economist at business consulting firm RSM UK. .
In the first day of this month, UK inflation rate soars to 40-year highadding to the misery of money-strapped consumers.
The consumer price index (CPI) rose 10.1% in the 12 months to July, up from 9.4% in June and remains at the highest level since February 1982, the Office for National Statistics (ONS) said.
According to the ONS, rising food costs were the biggest driver of the latest rally, with annual inflation for these items currently sitting at 12.7%, up from 9.8% in June. was driven largely by increases in prices for basic commodities such as bread, milk, and cheese. and eggs.
Paul Heywood, director of data and analytics at credit scoring agency Equifax UK, said: “The most vulnerable have run out of quick fixes, which is why we continue continued to see significant growth in credit demand”.
