Cost of living crisis being compounded by a cost of money crisis

Responding to today’s interest rate decision and Monetary Policy Committee minutes from the Bank of England, Rachelle Earwaker, Senior Economist for the Joseph Rowntree Foundation said:

“Interest rates reaching 5.25% will ring alarm bells for many families trying to keep on top of their finances while putting a roof over their heads and food on the table. But this alarm needs to now reverberate in the ears of those with the power to reset the economy.

“For the 2.3 million families taking on personal debt to pay rent or energy bills, today may be the day that they have to drop another essential item from their shop, or the day that a parent gives up their meal for a child.

“The reality facing family finances is that a cost of living crisis is being compounded by a cost of money crisis. Any slowdown in the cost increases on energy and fuel may now be replaced by rising costs on credit cards, overdrafts and mortgages. We need a firm political focus on building an economy which provides people with the security they need to build a better life.”

JRF’s Factsheet on the effect of high interest rates on personal debt is available here.