Cost of living and problem debt in the UK

This is a data study. We are a directory, not an adviser. This page summarises published information and is not financial or legal advice. It does not assess an individual’s situation or rank firms. Readers looking for regulated debt advice can contact StepChange, National Debtline or Citizens Advice.

The headline finding is that the latest published indicators describe easing annual inflation alongside fast consumer-credit growth and a large population with limited financial resilience. These are context indicators, not evidence that one measure caused another. The dates also differ: inflation and borrowing data are for June 2026, while the FCA’s detailed resilience estimates are from 2024.

Inflation: the headline numbers

The Office for National Statistics reports CPIH inflation of 2.8% in the 12 months to June 2026, down from 3.0% in May. It reports CPI inflation of 2.6%, down from 2.8%, and core CPIH of 2.8%, described as joint-lowest since September 2021.

Inflation is a rate of price change, not a measure of the price level or of debt. A lower annual rate can coexist with households reporting concern about their day-to-day costs.

What people reported about living costs

ONS’s May 2026 Public Opinions and Social Trends release found that 66% of adults said their cost of living had increased compared with a month earlier, down from 79% in April 2026. It also reports 63% were very or somewhat worried about rising costs.

When asked about price increases, 93% cited food shopping, 77% fuel and 61% gas or electricity. These percentages describe survey responses and are not a measure of the amount spent by any household.

Borrowing: Bank of England data

The Bank of England’s June 2026 Money and Credit release, published on 29 July, reports £1.8 billion of net consumer-credit borrowing and 9.1% annual consumer-credit growth. The release states 12.5% annual growth in credit-card borrowing and an effective interest rate of 21.49% on interest-charging credit cards. It also reports £7.7 billion of net mortgage borrowing.

The Bank notes that differences between gross lending less repayments and net lending can arise from different seasonal-adjustment methods. That is a methodological note about the series, not a discrepancy corrected by this article.

Financial resilience and vulnerability: the FCA picture

The FCA’s Financial Lives 2024 key findings use a different survey period. As of May 2024, the FCA estimated 13.1 million adults, 24%, had low financial resilience. It estimated 26.4 million adults, 49%, had characteristics of vulnerability, down from 27.3 million, 52%, in May 2022.

The FCA also reports that 7.8 million over-indebted adults had not used debt advice in the previous 12 months. Among 1.7 million people who had used debt advice or debt-management services, 61% said their debts had become more manageable. This is a reported experience measure, not proof of a particular outcome for any individual.

For related formal-insolvency series, see UK personal insolvency statistics. This study does not infer a direct causal path from inflation, borrowing or survey vulnerability to formal insolvency.

Method

Dates covered. ONS price data to June 2026 (released 22 July 2026); ONS opinion data from May 2026 (released 19 June 2026); Bank of England June 2026 Money and Credit (published 29 July 2026); FCA estimates based on May 2024 and January 2024 survey work.

Sources. The Office for National Statistics, Bank of England and Financial Conduct Authority.

How this page was compiled. The article places official series side by side, retaining their stated reporting periods and definitions. The Bank of England figures were directly checked against its June 2026 release. Every figure is linked to the publication that reports it. Figures from different national series have not been added together because the legal regimes, reporting frequency and definitions differ.

Scope and limits. The source dates are not identical. Survey responses, price indices, net borrowing flows and vulnerability estimates should not be treated as one common measure of “problem debt”.

Putting the dates on one page

The ONS inflation figures describe the 12 months to June 2026, while the ONS opinions release reports May 2026 fieldwork. The Bank’s borrowing release also covers June 2026. By contrast, the FCA low-resilience and over-indebtedness estimates are based on May 2024. This is a deliberate mixed-date context study, not a single same-month survey.

For example, CPI at 2.6% records the annual change in consumer prices. The 66% saying the cost of living had increased records a self-reported perception. £1.8bn net consumer-credit borrowing is a lending flow. 13.1m people with low financial resilience is a survey classification. The values cannot be added together or treated as alternative names for the same thing.

Consumer-credit detail

The Bank of England reports both an all-consumer-credit annual growth rate of 9.1% and credit-card borrowing growth of 12.5%. Credit cards are a component of consumer credit, so the two rates are not competing estimates. The effective rate of 21.49% on interest-charging credit cards is likewise a specific rate series, not the rate paid on every credit-card balance.

The £7.7bn mortgage-borrowing figure belongs to mortgage lending, which the Bank releases alongside consumer credit. It should not be described as unsecured consumer debt. The Bank also notes that differences between gross lending less repayments and net lending can result from seasonal-adjustment methods.

What the FCA classifications mean in this study

The FCA reports 26.4m adults with characteristics of vulnerability and 13.1m with low financial resilience. These are not identical populations and should not be combined. The 14.6m finding it difficult to cope and 5.9m with no disposable income come from the January 2024 recontact survey, another related but distinct source.

The advice finding is also specific: 61% of the 1.7m who used debt advice or debt-management services said debts became more manageable. It is a respondent-reported outcome among service users; it is not a prediction about people outside that group.

Limits on causal claims

The cited sources provide strong descriptive measures. They do not, by themselves, establish that June’s 9.1% consumer-credit growth was caused by the 2.6% CPI rate, or that either caused a future formal-insolvency count. This study therefore places the series alongside each other without making a causal claim.

Publication boundary

This study uses the ONS for price and opinion measures, the Bank of England for lending, and the FCA for resilience and vulnerability. The three organisations use different collection methods and publication calendars. Their figures are therefore reported as complementary context, not merged into a new composite indicator.

Reading this as context, not a forecast

The three source families answer different questions. The ONS price publication records changes in prices; the ONS opinions bulletin records what respondents say about living costs; the Bank release reports lending aggregates; and the FCA survey classifies financial resilience and vulnerability. A change in any one series does not automatically mean a change in another series.

The differing geographies are also relevant. The ONS opinion material is labelled Great Britain, the Bank’s money-and-credit statistical release is a UK lending series, and the FCA’s Financial Lives publication refers to UK adults. Those scopes should stay attached to each result rather than being silently converted into a single household count.

The data are useful for describing the setting in which problem debt is discussed. They cannot determine a household’s debts, repayments, assets or legal options. This article therefore avoids drawing a line from a national indicator to a particular personal outcome. For the formal-insolvency data collected on a different basis, the Insolvency Service monthly statistics collection is the appropriate primary record.

Talk to a regulated professional. The right route out of debt depends on your specific circumstances — income, assets, debts, dependents and where you live in the UK. A regulated insolvency practitioner or a debt-advice charity can review your position and set out the options that apply to you. Find a regulated practitioner near you or contact a free debt-advice charity listed above.

Frequently asked questions

What was the UK inflation rate in June 2026?

CPI was 2.6% and CPIH 2.8%.

Was credit-card borrowing growing?

The Bank reported 12.5% annual growth in June 2026.

How many adults had low financial resilience?

The FCA estimated 13.1 million, or 24%, as of May 2024.

How many over-indebted adults had not sought advice?

The FCA reports 7.8 million, using the previous-12-month measure in its May 2024 findings.

This page is published by The Insolvency Directory for general information about UK personal insolvency and debt options. It is not financial, legal, tax or debt advice, and reading it does not create a client relationship. The information is a summary — the rules change and depend on your circumstances. For advice specific to you, contact a regulated debt-advice charity or an authorised insolvency practitioner. Last reviewed 2026-08-10.