Financial wellbeing in February 2024

Summary

• Levels of financial difficulty have improved with the proportion of households missing a housing, bill, loan or credit card payment dropping to 6.9% in the month to February 7th.
• Despite missed payments dropping, consumers continue to take actions in response to high energy and food prices, with one in five (21%) households going without some foods and 13% skipping meals.
• Consumers’ outlook on their own financial situation improved this month with confidence in their current household situation increasing 10 points and confidence in their future situation increasing by 3 points.
• Despite this improved optimism about their household situation, confidence in the future UK economy fell 5 points this month to -31. 

You can view more data and articles from our monthly tracker survey on our dedicated Consumer Insight Tracker page.

Financial difficulty falls in February

This month has seen significant falls in both of our financial difficulty metrics; the household missed payment rate and financial adjustment rate.

The proportion of households that missed a payment fell in the month to February 7th, with 6.9% of households reporting that they missed a housing, bill, credit card or loan payment. This level of missed payment is down from 8.5% in the month to January 12th and marks the fourth straight month that we have observed a large change in the rate compared to the preceding month. There is historical precedent for this volatility in missed payment rates around this time of year, with this being the third straight year in which we have seen a drop in the missed payment rate in December, followed by a rise in January and fall in February. 

Looking closer at the types of missed payments, 3.5% of households missed a household bill payment, 3.3% missed a loan or credit card payment and 2.7% of UK households missed a housing (e.g. mortgage or rent) payment. 

6.9% of households said they had missed a payment in the month to February 7th

Another positive trend observed this month was a drop in the proportion of households making at least one adjustment to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month. The proportion of households reporting at least one adjustment fell to 52% this month, down from 58% in the month to 12th January. Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing.  This again is a sign that household’s financial situations may be improving with the lowest level of adjustment to cover essential spending seen in the last two years. 

Over half of households made at least one adjustment to cover essential spending in the last month

Many households continue to make sacrifices in response to high prices

Despite these improved financial difficulty figures, consumers continue to be worried about high energy (82%) and food prices (79%). Both of the figures are down on recent highs (93% worried about energy prices in August 2022, 88% worried about food prices in February and May 2023) but remain very high by historical standards. 

Worry about energy and food prices remains high

This high level of concern is reflected in the actions consumers’ are taking to reduce their bills. Four in ten (42%) households said that they have not turned the heating on when it is cold in the last six months to try and ease the financial pressure on their household. 

Many consumers have also been finding ways to reduce their food expenses. More than half (53%) reported having bought cheaper products due to rising costs, more specifically 46% have been buying more supermarket-own budget range items. More concerningly, one in five (21%) households have gone without some foods whilst 13% have gone so far as to skip meals. Certain groups of consumers in our survey were more likely to have skipped meals, at 21% among renters and 25% among the unemployed. 

Consumers have taken significant steps to cut their food costs

Household consumer confidence improves

Consumers’ confidence in their own financial situation improved this month with confidence in their current household situation increasing 10 points and confidence in their future situation increasing by 3 points.

Four in ten (44%) consumers rated their current household financial situation as good, whilst one in five (20%) rated it as poor (giving the net score of +23). 

Consumers’ outlook on their future household situation further improved this month to a score of -3, up from the record low of -52 in September 2022. This is calculated from 23% of consumers thinking their household finances will get better over the next 12 months and 26% thinking it will get worse. Although more people still think their situation will get worse rather than better, this is the highest level of net confidence we have observed since October 2021. 

Consumer household confidence rose in the month to February 7th

Despite this improved optimism about household finances, confidence in the UK economy went in the other direction. Consumers’ confidence in the future UK economy fell this month to -31, down 5 points compared to last month. This figure is calculated from one in five (19%) consumers thinking the economy will improve over the next 12 months and half of consumers (50%) thinking it will get worse. 

Summary

This month has been characterised by improvements in our various household metrics; both of our indicators of financial difficulty decreased and consumers’ are feeling more optimistic about their current and future financial household situations. Despite this we still see that the vast majority of consumers are worried about high prices and are taking substantial steps to reduce their expenditure. Consumers also remain fairly pessimistic about the UK economy improving anytime soon. 

Methodology

The fieldwork was conducted by Yonder on behalf of Which? between 7th and 8th February 2024. A sample of 2,068 consumers was surveyed online and weighted to be nationally representative.