An estimated 2.5 million UK households missed or defaulted on at least one mortgage, rent, loan, credit card or bill in January 2022, according to the latest findings from Which?'s consumer insight tracker.*
This number marks a significant increase from the 1.7 million households who were estimated to have missed a payment in December 2021.
Missed payment rates were highest among those on lower incomes. One in seven (14%) households with an income under £21,000 missed a payment in the last month.
With the cost of living on the rise, these figures demonstrate how the current crisis is affecting household finances - with clear signs that many of us are having to adjust our spending to stay afloat.
Which? is calling for businesses and the government to do more to support those in financial distress.
Here, we explain what the cost of living crisis means for you and how to save on bills in the coming months.
The collapse of a number of energy firms in recent months means some households have bit hit with increased bills.
In fact, over half (56%) of the participants in our survey had been affected by energy price rises in the past month.
As a result, half (51%) of consumers said they had been putting the heating on less frequently in a bid to keep costs down, and nearly as many (46%) had reduced their usage of lights or appliances around the home.
Only a quarter reported not having taken any of these measures in response to energy costs increasing.
One respondent said: 'Everything is going up. The energy prices will rise 50 per cent and that will mean I cannot put the heating on. Food prices rising means that I will have to eat less, miss meals or buy cheaper food.'
'Everything's gone up in priceu2026but my wages haven't'
Alongside rising energy bills, the majority of participants in our survey (58%) said they'd recently been affected by increased food prices.
Many people said they have bought cheaper products, shopped around in different stores or bought extra items when on promotion.
Some reported having to take more drastic measures. One in 10 (10%) of those who experienced higher food prices said they had skipped meals, 9% prioritised meals for other family members, and 3% said they had used a food bank.
'Everything has gone up in price. Food, petrol and gas and electric have gone up so much but my wages haven't. Last week was the first time I've ever had to use a food banku2026how is it that I work but had to use a food bank?', one participant told us.
Which? calls for urgent action to support customers in financial distress
Prices are expected to rise further in the coming months, with the Bank of England predicting inflation will remain around 5% before peaking at about 6% in April 2022.
Those on the lowest incomes, single parents and retirees will likely be the worst affected.
In response to this crisis, Which? is calling on the government, regulators and companies to work quickly to make sure they are ready to support customers in financial distress.
The government must urgently clarify what support will be put in place for those struggling to pay rising energy bills.
With the new price cap due to be announced on 7th February, it is not fair to leave millions of people hanging on for help until the Spring Statement in March.
*The Consumer Insight Tracker is an online poll conducted monthly by Yonder on behalf of Which?. It is weighted to be nationally representative with approximately 2,000 respondents per wave.