When inflation was last running at 7% Margaret Daly was training to be a teacher and bringing up a young family, so money was tight. “In the early 1990s I was studying,” she says. “That was very difficult. I had two small children and I was always trying to make ends meet. When I qualified it took a few years after all that struggling and living frugally to find my feet.”
As the 90s wore on, things improved for Margaret, now 60, as she progressed through her career and saved up enough to buy a home. Throughout the rest of the decade and the early 2000s her salary rose, against a backdrop of inflation that was typically 1.5-2.5%.
When the recession hit in 2009 she weathered the storm. But now, four years after she retired, things are getting harder for Margaret, who lives in Colchester. “At the beginning of retirement the pension I was getting was enough – I live comfortably; I could buy what I wanted to buy; I could save a bit of it.”
During the pandemic, there was not much to spend money on. But now she says her bucket list has “gone out of the window” and she is “starting to worry because everything has gone up”.
“I’m having to be a bit more savvy when I shop – when I go to Tesco I get the Clubcard offers or look for the yellow stickers. I’ll buy the fruit and veg that’s on offer.”
In Norwich her son Jon, who works for the insurance company Aviva, and daughter-in-law Jess, who works for the University of East Anglia, both 35 with an 13-month-old daughter, Robin, and a cat called Polly, have noticed the same. The Dalys, who first spoke to the Guardian about their soaring bills late last year, are also thinking twice before putting anything in their trolley.
“There are non-essential items that I just don’t buy any more,” says Jess. “Things like Marmite – I looked at it and it was more than £3 so I’m not buying it now. Those kind of things aren’t on offer any more.”
She and Jon do not eat meat and try to shop for products that are not covered in plastic packaging, but she says priorities have had to change. “When things are getting more expensive the priority is going to be what’s affordable, not what’s sustainable.”
Heating is a big problem and is playing on the minds of both households. Jess and Jon are still on a fixed-rate tariff with British Gas, which is due to finish at the end of April, and are wondering what to do then. Currently there are no good fixed rates available, and their best bet will probably be their provider’s standard variable tariff – the one capped by the regulator, Ofgem.
When we last spoke to the couple analysts were suggesting the price-capped tariff would hit £1,660 this April, which seemed shocking enough. Instead, it came in at £1,971, more than £300 extra, and so the family is expecting a sizeable increase when their current rate ends.
They recently received an email from British Gas spelling out the increase: the unit cost of gas is rising from 3.3p to 7.3p per kWh and the standing charge will go from 26.5p to 27.2p, while for electricity the unit price is rising from 19p to 29.2p per kWh and the standing charge from 24p to 37.9p.
Their annual gas bill will more than double, and the total annual energy bill is estimated to make a huge jump from £1,081.18 to £1,945.24. The changes are in line with other customers, who on top of rising unit prices have experienced large increases in electricity standing charges, caused in part by the failure of small suppliers last year.
Margaret has a smart meter and has already seen the impact of the increase in her energy costs. “It used to be about £2.50 a day; it’s now going up to £7.50. I’ve thought about turning off the heating, turning off the radiator, maybe cooking one big pot of something a week and then eating it over several days.”
Jess has been making similar calculations. “I’ve never thought about what we’re having for dinner in terms of energy before, but the other day I decided not to roast potatoes as that would mean having the oven on for an hour when doing mashed meant having the hob on for 10 minutes.”
There are other things that have started to bite since the Guardian last spoke to the Dalys. Jess has recently returned to work and, because Robin has started at nursery, plans to drive to campus so she can get back quickly if she needs to. Parking on campus had been free during the pandemic, but costs have been reintroduced. They are an extra demand on the family’s budget. “Stuff like that is getting rolled back on now,” says Jess.
They also have two days a week of childcare to pay for, although they are using the tax allowance from the government, which gets them an extra two days a month for their money.
The family shop in Morrisons, and say they have found prices there to be lower than at some of its rivals. Margaret says she has been considering doing some of her shopping at Lidl. She is also considering trading down on the branded food she buys.
Jess and Jon have been keeping a record of their spending for four years, which allows them to see exactly what has happened to budgets. “Our council tax has gone up, our internet has gone up, our water has gone up, although only by a small amount,” says Jess. “Everything’s going up apart from our wages.”
For Margaret, now on a pension, inflation has meant cutting back and reverting to some old habits. She says for the first time since those early days she has started to write down what she is spending. “I’m giving myself little budgets for everything,” she says.
“We went through the years of plenty – you didn’t think about it, you just put it in your trolley. Now I’m looking for the bargains.”
