There are signs that the current economic climate is now really starting to hit home, but Brits are keeping a stiff upper lip, according to Mintel
Those who see themselves as comfortably off or managing easily has fallen from almost two thirds (64%) in 2006 to just over half (51%) this year.
Meanwhile, there has also been a dramatic leap in those who say that even though they are getting by, things are pretty tight, with this figure rising from just one in four (25%) in 2006 to 39% this year.
Senior finance analyst at Mintel, Toby Clark, said, "The good news is that the vast majority of people can still afford to make ends meet. But there has clearly been a deterioration in people's perception of their financial situation over the past two years, as rising interest rates and higher living costs have really started to take hold."
"As people look to make their hard earned cash stretch further, any company that can clearly show how it offers good value for money, will be at a real advantage," he adds.
At the extreme, the proportion of those who are finding their financial commitments almost impossible to handle has doubled. But the figures are still very low, with 4% of Brits saying that they are really struggling and may have missed payments recently (up from 2% in 2006).
Mintel's exclusive consumer research shows that 46% of adults still have outstanding unsecured (non-mortgage) debt.
But with banks tightening their lending criteria on loans, many people have been forced to turn to their credit cards to cover rising living costs, despite this being one of the most expensive ways to borrow money.
Indeed, the first four months of 2008, saw a 7% rise in gross credit card lending compared to the same period in 2007.
On top of this, Mintel found that the number of people who have a financial safety net in the form of emergency savings has fallen from over two in five (43%) in 2006 to just three in ten (29%) this year. Meanwhile, the latest ONS figures suggest that the savings ratio** is down to its lowest level at just over 1.1% for the first quarter of 2008.
Clark added, "Rising food and fuel prices combined with higher interest rates means that people are now having to find quite a bit more money each month to maintain their standard of living.
“And while some are clearly using plastic to cover the rising living costs and mortgage repayments, others are dipping into their savings.
He continued, “The savings ratio is also on the decline because for many there is simply nothing left in the pot at the end of the month to put away for a rainy day.”
It is worrying to see that one in three (34%) adults have unsecured debt and no savings at all. And it is Britain's younger generations that are the most likely to be in this situation, with over half (53%) of 25 to 34 year olds admitting this.
And if consumer sentiment is anything to go by, the future of the housing market looks bleak. In fact, twice as many consumers believe that house prices will fall in the near future (33%) as believe they will remain steady or continue to rise (15%).
But despite this doom and gloom, every cloud has a silver lining as falling house prices invariably makes property that much more affordable for first time buyers.
Clark concluded, "Many young adults will still have student loans to repay and will be living in rented accommodation. Without any savings, many will now find it impossible to buy their first home.
"But those who have gone without and have managed to save for a house deposit could soon be rewarded. With the likes of the Halifax and Nationwide cutting some of their mortgage rates in the last week or so and property prices falling, these more cautious consumers may finally get the chance to get a foot on the property ladder."
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