The proportion of those who say they can easily afford Christmas this year has nearly halved, according to a debt charity which is warning that more people are turning to credit.
StepChange said fewer than a quarter (24%) of people were in a comfortable financial position heading in to the festive season, compared with nearly half (45%) in 2021.
The findings of its survey reflected, the report stated, the surge in the cost of living during 2022.
Inflation is currently running at a 41-year high of 11.1% and earnings growth is failing to keep pace.
The main drivers across the economy have been energy-related – as the cost of producing goods including food and services has soared while household power and gas bills are at record levels amid Russia’s war in Ukraine.
StepChange said it was worried about Christmas spending via credit products – with 61% of people surveyed by YouGov planning to purchase festive items using a credit card.
Over a third expect to use their overdraft while 40% of borrowers intend to tap Buy Now, Pay Later (BNPL) providers.
More from BusinessIt might seem attractive but interest rates have been rising throughout 2022 as the Bank of England seeks to help tame inflation – adding further strain to family finances in the process.
The Bank’s data is yet to show a leap in unsecured borrowing but the charity said Christmas was set to tempt consumers towards it.
Advertisement 1:28 Average family Xmas grocery shop is ‘£60 more’StepChange warned against spending what could not be easily afforded as bills including rents, mortgages and even heating were already proving too tough for many and could yet rise further.
Richard Lane, director of external affairs at StepChange, said: “While it can be a special time of year to celebrate with family and friends, Christmas can also be a financial strain, with many feeling pressure to spend beyond what they can afford.
“This year, with household budgets already stretched to their limit by the cost of living crisis, consumers may be especially at risk of being drawn into using short term credit products which are widely advertised as a way of funding a happy Christmas.
“The reality is with no sign of inflation easing, and energy bills set to rise further into 2023, taking out unaffordable credit over the festive season may only lead to a debt hangover in the New Year and beyond which may prove difficult to overcome.”
