Arrears, inflation and credit strain household balance sheets
Households feel financial pressure through many channels across different markets as arrears grow, energy bills push inflation higher, an insurance fund’s contribution gap widens and the stock of credit rises.
Economics & Markets··Evening
Arrears climb quickly in Argentina
Arrears on lending to individuals in Argentina reached 17.5 per cent in June, according to Universidad Austral and Eco Go based on central bank data. Of the 20.4 million people holding credit, 5.3 million, or 26.1 per cent, were over 90 days behind. Irregular balances stood at 3.6 per cent in December 2024 and 12.6 per cent a year later. Comparisons need care: the central bank raised the minimum reportable debt from 1,000 pesos to 25,000 pesos in July 2024. The official financial-system figure was 12.8 per cent in May, a two-decade high. Non-bank lenders, including digital wallets and card issuers, hold 14.1 per cent of the portfolio with 31 per cent arrears, against 15.2 per cent at banks. Marina Dal Poggetto of Eco Go links the deterioration to a stalled credit cycle, exit from negative real rates, and incomes short of instalments. Personal loan rates run 55 per cent to 172 per cent at private banks and up to 260 per cent at digital wallets, against 33.8 per cent annual inflation. President Javier Milei’s government has ruled out intervening.[1]
Britain’s energy cap lifts inflation again
In the United Kingdom household pressure runs through energy bills and inflation more than payment arrears. Economists expect the Office for National Statistics reading due on Wednesday to put July inflation at 2.9 per cent, up from 2.6 per cent in June, after Ofgem lifted its household energy cap by 13 per cent. Thomas Pugh, chief economist at RSM UK, estimates the cap rise adds about 0.44 percentage points to headline inflation, partly offset by cheaper fuel. The Bank of England held its base rate at 3.75 per cent, expects inflation to reach 3.2 per cent before year-end, and warned further Middle East escalation could take it to 4.5 per cent by mid-2027. Prime Minister Andy Burnham cut VAT on consumer electricity bills by an average of 45 pounds a year from October and capped bus fares in England at 2 pounds; the bank expects those steps to lower headline inflation by 0.1 percentage point. Markets price near a one-in-four chance of a September rise.[3]
India’s insurance fund and Korea’s credit stock add channels of strain
In India pressure appears in the workers’ insurance fund contribution balance. Actuarial projections show the Employees’ State Insurance Corporation moving from a 404 crore rupee surplus in 2024-25 to a 1,072 crore rupee deficit in 2025-26, widening to 7,686 crore rupees by 2028-29. Contribution income is projected to grow about 6 per cent a year from 19,414 crore rupees to 24,510 crore rupees; benefit spending rises from 16,833 crore rupees to 29,447 crore rupees. Medical care grows 15 per cent a year, maternity benefits 25 per cent and dependants’ benefits 17.25 per cent. Interest income keeps an overall surplus falling from 7,099 crore rupees in 2025-26 to 1,972 crore rupees by 2028-29. In South Korea, outstanding household credit surpassed 2,000 trillion won, or 1.41 trillion dollars, in the second quarter, industry sources told Yonhap, driven by home and share loans. Household credit reached a record 1,993 trillion won at end-March; loans across financial institutions rose by at least 21 trillion won in the second quarter. Cool-down steps have not weakened home demand; share loans climbed with the rally. For 2025, household credit rose 56.1 trillion won, or 2.9 per cent. Argentine arrears, British energy inflation, India’s contribution gap and Korea’s credit stock show pressure building through different channels.[2], [4]
