Households are facing the toughest cost of living squeeze in a generation as bills soar alongside almost standstill wages.
From supermarket prices to energy bills, the cost of living is going up across the country. Many households in Wales have seen huge rises in their energy costs in recent months as their fixed deals have expired and they have found providers simply aren't offering anything cheaper than their standard rate.
It comes as Prime Minister Boris Johnson confirmed a planned £12billion National Insurance rise will go ahead from April, insisting it is "right", as charities warn inflation could throw thousands more families into the poverty bracket.
Read more: Why are gas and electricity prices rising so much?
Under the plans, employees, employers and the self-employed will all pay 1.25p more in the pound for National Insurance from April 2022 for a year. After that, the extra tax will be collected as a new Health and Social Care Levy. The changes to National Insurance will see an employee on £20,000 a year pay an extra £89 in tax. Someone on £50,000 will pay £464 more.
Use our calculator below to find out how much more you will pay (it may take a second or two to load):
How the calculator works
Energy bills: Assumes a 54% increase to default tariff bills from April due to latest price cap rise. Households will get £200 off their energy bills from October, to be paid back over the following five years.
Mortgage rates: Assumes a 0.25 percentage point rise to a standard variable mortgage rate payment, in line with the expected rise of the Bank of England’s base rate from 0.25% to 0.5%.
National Insurance: Based on rate rise for employees from 12% to 13.25% on incomes of £9,880 to £50,270 a year, and from 2% to 3.25% on anything over that. For the self-employed, the rate will go up from 9% to 10.25% and from 2% to 3.25% respectively on equivalent profits, plus new weekly payments of £3.15 on profits over £6,725, up from £3.05.
Rail fares: Assumes planned 3.8% rise on regulated fares in England in March will apply across rail network.
Council Tax: Assumes an increase of 3% to Council Tax bills. Households in band A-D properties in England will also get a one-off rebate of £150 from April.
Food Bills: Consumer price inflation on food and non-alcoholic drinks rose by 4.2% in the year to December. The extent of future rises is very difficult to predict. This shows how shopping bills would increase over the course of 2022, assuming the same rate of increase.
Energy bills
Soaring wholesale gas and electricity prices have seen swathes of energy suppliers going bust in recent months. This is expected to hit consumers in April when a rise in the price cap – which limits the amount that can be charged per unit of gas and electricity – comes into effect.
Regulator Ofgem is set to announce the latest changes in February, but analysts are predicting that household energy bills will increase by around 50% for customers on standard variable and default tariffs.
This could push the average household energy bill from £1,277 a year to more than £1,900, or roughly £50 extra a month.
Mortgage rates
In February, the Bank of England is expected to announce that it will raise its main interest rate from 0.25% to 0.5% in a bid to tackle rising inflation. Variable rate mortgages are likely to mirror the 0.25 percentage point rise, meaning someone borrowing £140,000 over 20 years on a standard variable rate of about 3% could see their monthly payments rise by nearly £20.
Most mortgages are on fixed rates, although people on such deals could be hit by the bank rate rise when these expire.
National Insurance
Last year, the Government said it would bump up National Insurance (NI) contributions to shore up the finances of a severely overstretched NHS and social care sector. From this April, the NI rate for employees is set to rise from 12% to 13.25% on incomes of £9,880 to £50,270 a year, and from 2% to 3.25% on anything earned over that.
This would see the NI contributions of someone earning £30,000 go up by around £18 a month.
For the self-employed, the rate would go up from 9% to 10.25%, and from 2% to 3.25% respectively on the equivalent levels of profit. Additional weekly payments on any profits over £6,725 will also rise from £3.05 to £3.15.
Rail fares
Just as millions of workers are expected to rejoin daily commutes as they head back to the office, rail fares are also expected to rise. Ministers announced last year that fares will increase by 3.8% in March, and while this applies to “regulated” fares in England such as season tickets and long distance returns, similar price hikes are expected elsewhere. Scottish peak and off-peak regulated fares went up by the same amount this month.
Council Tax
Council tax rises are expected across Wales, England and Scotland. A 3% rise would add nearly £5 a month to the average Band D council tax bill in England, which was £1,898 a year in 2021-22.
Food bills
Consumer price inflation for food and non-alcoholic drinks rose by 4.2% in the year to December, and some experts predict grocery bills could rise further in the coming months. It is impossible to know how prices will change this year, but assuming they continue to rise at the same rate, shoppers could be feeling the pinch even more by the end of 2022.
Are you seeing the cost of living go up? Let us know in the comments below
