Forty per cent of people say they will save no money all year, according to new stats from the Office for National Statistics (ONS).
Inflation has soared into the double digits recently although it now seems to be decreasing slightly to 10.1 per cent.
But failure for pay packets to keep up, means that people are using cash they may have usually saved, to spend on ever-increasing bills and food.
More than a fifth of adults in Britain said they had borrowed cash or used more credit because of the increased cost of living.
While the cost of living crisis is straining some family finances, people are now raiding savings they ,may have built up during Covid-19 lockdowns.
Inflation has been fuelled by high energy bills, increased by the Russian invasion of Ukraine.
The ONS said those in vulnerable groups are more likely to get into debt.
Some 45 per cent of people who have borrowed more compared to last year have been suffering higher anxiety levels, the report said.