An index which measures indebtedness showed a 14% rise in people who said the amount of debt they had taken out was putting them under financial strain, up from 43% in Q3 to 57% in Q4.
Between the three months ending January 2014 and the three months ended January 2015 pay including bonuses increased by 1.8%, figures from the Office of National Statistics revealed. The impact of this gradual rise in wage growth is reflected in the index which showed a fall in the number of people citing a drop in income as the reason they had got into debt, from 27% in quarter three to 18% in quarter four.
The reduction in the cost of living which has pushed the rate of inflation down to 0.3%, due to falling fuel prices and food costs, has resulted in a 4% drop in consumers blaming a rise in their personal expenses as the cause of them being in debt.
Matthew Cheetham, chief executive of debt management firm Harrington Brooks which produced the index, said: “Over commitment is a rising problem across society but incremental increases in lending and spending often go and noticed until it becomes too late with individuals suddenly unable to make the minimum interest repayments on purchases or loans.
“It is important that as a society we are not judgemental but instead recognise how incredibly easy it can be to lose track of one’s money.”
Cheetham is calling for individuals to identify they have debt problems at an early stage and seek advice instead of continuing to borrow when they are under financial stress.