Inflation may increase debt problems

Those who are already struggling with debt may be left considering taking out individual voluntary arrangements (IVAs) after the latest inflation figures indicated Britons are facing a further struggle with their everyday living costs.

Data published today (May 17th) by the Office for National Statistics (ONS) showed the Consumer Price Index rate was up to 4.5 per cent in April, having dipped from 4.4 per cent in February to four per cent in March.

This may suggest March’s fall in the rate by which the cost of living is rising was just a blip, although the April figures did indicate that matters may be slightly better for those with mortgages, as the Retail Price Index dipped from 5.3 per cent to 5.2 per cent.

However, the overall news may be particularly worrying for many consumers.

The ONS noted the biggest contributions to the increase came from household services – notably utility bills, as well as tobacco and alcohol, plus the cost of motoring, although the last of these factors was not as strong as it might have been after fuel duty was cut in the Budget.

And the impact on consumers – which may lead some to consider an IVA – has been noted by price comparison website Moneysupermarket.com.

Head of banking at the site Kevin Mountford said: “Many families will feel like their finances are approaching breaking point.”

The portal recently produced data to back this up, with a poll showing 22 per cent of consumers stating any further rise in the cost of living would tip them beyond the point where they could make ends meet, while the average individual has already had to tackle an increase in monthly outgoings of £54.

Posted by Paul Thacker